Brussels’ ambition on sustainable finance may be waning. Brussels may be planning to raise €250 billion in green bonds — but they won’t meet its own best-in-class standards.
The European Commission will on Tuesday present its sustainable-finance strategy, which includes a voluntary green-bond standard
for corporations and sovereigns, a draft of which was previously
obtained by POLITICO, as part of an effort to drive more private cash
toward its climate goals.
Yet the Commission won’t itself use the new label straightaway for climate-friendly bonds that finance the EU recovery fund — instead, it will try to incorporate its taxonomy of green investments into market standards.
Brussels’ decision to press ahead with its green-bond issuance may be
for practical reasons, as its green list of climate-friendly
investments was still on the docket when it presented its borrowing plans.
Pascal Canfin, a French EU lawmaker for Renew Europe, said it was
“common sense” not to use the standards at first. “The standards will be
in place at best in 18 months so you cannot ask them to align at the
beginning,” he told journalists on Monday.
Still, the move raises the question: If the Commission isn’t using the benchmark, why should anyone else?
It may also be an indication of waning ambition within Brussels for
sustainable finance following heated debates over the taxonomy — with
criticism coming from both climate activists and countries with
polluting industries — and a sign of just how difficult it is to
reconfigure the financial industry toward green goals.
Sustainable finance has dominated the EU's financial services agenda so far this year, both due to the fight over the taxonomy and far-reaching work on disclosures.
“The question is will the renewed sustainable finance strategy be a
drag on the transition toward sustainability or will it be a driving
force? I’m not sure yet,” said Paul Tang, a Dutch EU lawmaker.
The Socialist MEP, who signed a June letter
calling for an ambitious strategy, said “reduced enthusiasm” in the EU
executive may be reflected in a list of possible policy actions with few
concrete steps.
“Are you going to propose legislation or not?” Tang added.
As well as the green-bond proposal, the strategy
suggests eye-catching measures such as overhauling green credit ratings
and considering capital relief for green loans — despite resistance
from financial regulators — but over a number of years and without
committing to bring forward changes, according to a draft obtained by
POLITICO.
Voluntary standard
Critics will also point to the decision to make the green-bond standard voluntary instead of mandatory.
Corporations or governments will have to abide by the requirements only if they want to call their bonds “European green bonds.”...
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