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The future EC, headed up by Ursula von der Leyen, will put sustainability and inclusivity at the heart of the European financial policy. Over the last weeks, as the European Parliament elected Ms von der Leyen and approved most of her team, it was clear that advancing sustainable finance will be a key driver in their ambition for Europe to become the first climate-neutral continent.
Valdis Dombrovskis (ex-Prime Minister and Minister of Finance of the Republic of Latvia) will become Executive Vice-President of ‘An Economy that Works for People’ and Commissioner for financial services. He spearheaded sustainable finance in the EU under his role as Commissioner in the Juncker Commission and he’ll continue where he left off.
During his parliamentary hearing he continually highlighted the importance of his role to support green and digital transformations, while also ensuring social fairness. It is hoped that strong connections develop with Frans Timmermans responsible for a ‘European Green Deal’.
Dombrovskis will be responsible for developing a new green finance strategy and coordinating an investment plan worth €1 trillion of climate-related investment over the next decade (the Sustainable Europe Investment Plan). He confirmed that he will review the corporate disclosure rules (particularly the Non-Financial Reporting Directive) to integrate greater focus on sustainability. He will also oversee turning the EIB into a climate bank by making half of its total financing dedicated to climate investment by 2025, and he believes phasing out of fossil fuels from the EIB should be part of the strategy.
Meanwhile, tensions are also evident at the European Investment Bank. The Bank – which the EC wants to turn into a ‘climate bank’ – is seeking approval to end investments in fossil fuels by 2020 but its shareholders, the Member States, are so far not all in agreement on the proposal.
Sustainability and inclusivity have correctly been placed as guiding principles for Europe’s finance policy. The next few months – with the decision on EIB, the start of the new European Commission and finalisation of the taxonomy all imminent – are moments when these principles can be put into action at speed. This is a huge opportunity to create a prosperous, fair and sustainable Europe which should not be wasted.