09 December 2019

EBF presents proposals to scale up sustainable finance

The recommendations are part of a new EBF report titled ‘Encouraging and Rewarding Sustainability‘ that identifies how public-private cooperation can be leveraged to accelerate sustainable finance.

The EBF report outlines a number of concrete proposals to stimulate and contribute to the debate of the European institutions, regulators and banks on how to scale up sustainable activities, mobilize and redirect private financial flows to support such activities, develop new instruments and increase the number of eligible projects and help capital markets developments.

Specifically, the report addresses:

• Sustainable finance guarantee fund
• Green loan securitisation framework
• Sustainable finance supporting factor
• Preferential treatment of collateral
• Carbon price
• National fiscal incentives policy examples

A specific element in the report is a recommendation to develop a ‘Sustainable finance supporting factor” as part of legislation on bank capital requirements in the European Union. It is proposed that the European Banking Authority explores, as soon as possible, the possibility of introducing a supporting factor for certain assets that are classified as sustainable under the EU taxonomy and that at the same time demonstrate a lower financial risk due to their sustainability profile based on eligibility criteria established by the EBA. This proposal addresses the criticism of the Green Supporting Factor that was perceived as lacking a link between risk and capital, which therefore raised financial stability concerns.

Banks are committed to serving as enablers of the future by demonstrating leadership in Europe on the challenge of climate change and in financing the transition towards a sustainable society.

To achieve the objectives of the Paris Agreement and Sustainable Development Goals the growth of sustainable activities must take place throughout all economic sectors, especially manufacturing and services. The sustainable financing markets must mirror the sustainable developments in the real economy and be able to finance and support that development without too many limitations and channel financial resources towards sustainable projects in a timely manner to help transitioning of the economy.

Full press release on EBF

Full report on EBF

 

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