Responding to the European Commission consultation, AFME has called on the Commission to provide more clarity to corporates, banks and investors over the roadmap to the Paris decarbonisation targets, AFME highlighted that only a holistic approach... will achieve the deep structural change required.
AFME is calling on the Commission to:
- Provide a clear roadmap for the transition of the real economy,
including industry specific milestones and frameworks such as the
appropriate pace of phasing out stranded assets.
- Deliver a strong partnership of the public and private sector, with
actions including market-based carbon pricing mechanisms, a plan to
gradually phase out blanket government subsidies to high carbon emitting
industries, and fiscal policy incentives to green issuers/borrowers and
investors/lenders.
- Promote the collection of better ESG data to support good
investment and lending decisions and more alignment in reporting
requirements between corporates, banks and investors at the
international level.
- Encourage carbon-emitting companies to lower their carbon emissions
through appropriate transition pathways rather than applying penalising
capital charges to banks that will have a knock on impact to these
companies and overall ability to transform.
- Encourage the development of climate/environmental risk assessment
methodologies that include a forward-looking perspective in addition to
existing backward-looking analyses to enable a more accurate calibration
of regulatory capital requirements reflecting the long term asset risk
profile.
Rick Watson, Managing Director, Capital Markets at AFME said:
“The transition to a more sustainable economy is of vital interest
and importance to everyone. Investors, corporations and banks all stand
ready to play key roles in achieving this including through harnessing
the power of capital markets to make it happen. But in order to do so
all participants need to understand more about what is expected of them
at this crucial stage. For lenders, this includes clarity around
disclosure requirements and the development of risk analysis and
management processes which are essential to underpin future
incorporation of ESG into the prudential framework. Broader progress
towards delivering a comprehensive and coherent sustainable finance
programme must be a shared endeavour between the public and private
sectors to provide consistent sustainable finance regulations for
corporates, banks and investors”.
AFME
© AFME
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