SUSTAINABLE FINANCE

“We shall require a substantially new manner of thinking if mankind is to survive.”

Albert EinsteinTheoretical physicist

“Sustainability should be an integral part of everyday culture, processes and decision making. Sustainable future is about achieving long-term business benefits and prosperity. Once financial system fully embraces financial as well as societal and environmental benefits, all finance will be sustainable. We will no longer need to speak about sustainable finance as such.”

Wim MijsEBF Chief Executive Officer

“In Europe banks have a special responsibility that comes from being in the centre of our financial system.”

Valdis DombrovskisEuropean Commission Executive Vice President for an Economy that Works for People

To meet the objectives of Paris Agreement and the Sustainable Developments goals, trillions of euros will need to be mobilised globally. Europe alone has identified a yearly financial gap of more than 180 bn euro to finance policies and investments necessary to keep the global temperatures in line with the objectives of the Paris Agreement. It is clear that without the private sector the funding gap cannot not be closed. Given that around two thirds of the European economy is financed by banks, banks play and will continue to play a crucial role in the transition to a more sustainable future.

To reach the objectives of the Paris agreement, the growth of sustainable activities must take place throughout all economic sectors. 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. Most companies are at different stages in their transition journey towards low-carbon and sustainable activities. Banks have a key role to play in supporting corporates on this journey. The steps being taken towards increased sustainability should be encouraged and supported by the EU legislation.

EBF Strategic priority
Transformation of the banking sector
Opportunity for banks to connect societal and financial goals

Our 4E approach to Sustainable Finance

ENABLE

Smart regulatory framework that enables banks to support their clients in reducing negative and increasing positive impacts.

ENCOURAGE

Review of legislative and non-legislative framework to encourage and reward the shift towards sustainable economy.

ENGAGE

Scale-up competences to improve sustainability of bank and market-based financing. Partnering with UN, regulators, businesses etc.

EDUCATE

Empowering consumers and engage finance professionals to better understand

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Spotlights

Taxonomy

Supporting factor

Green Securitisation

Need for a smart regulatory framework

The EC’s action plan is a significant step in developing an international regulatory system in which banks can play a concrete role in financing the global energy transition, decarbonisation of the economy and achieving the objectives of the Paris Agreement and the SDGs of the United Nations.

Citizens and business in the European Union can benefit from a smart regulatory framework that bridges initiatives, fuels further development of innovative and sustainable products, and enables and encourages financing of the transformation to sustainable societies. The European Commission’s leadership and firm commitment to deliver on the action plan has substantially accelerated the sustainability agenda across Europe. Its proposals are forward-looking in their approach and cover a lot of ground in a way that is unprecedented by the work of any other institution so far.

We are supporting the European Commission process since the beginning. We have contributed to the report of the High-Level Expert Group on Sustainable Finance and are engaged in the subsequent roll-out of the EU Action Plan.

The global nature of these issues, as well as the global nature of financial markets, justify a global response and global public-private partnership. As EBF we support EU coordination efforts at the global level and encourage expanding the use of the EU taxonomy as a common language outside the EU once enough progress at the EU level has been made.

RENEWED SUSTAINABLE FINANCE STRATEGY

BENCHMARKS

Proposed EU measures on Climate Transition and Paris-aligned benchmarks to address the risk of greenwashing and improve

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DATA, DISCLOSURES & REPORTING

Relevant, reliable and comparable data are necessary not only to comply with the envisaged EU

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GREEN BONDS

Green Bonds and Green Covered Bonds may prove instrumental in mobilising the bond market for climate

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TAXONOMY

A harmonised taxonomy is important to remove uncertainty, ensure comparability and allow competitive solutions

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ECOLABEL

The objective of the EU ecolabel is to increase the trust of retail investors in investing in financial products pursuing sustainability objectives.

CLIMATE RISK MANAGEMENT

Sustainability-related financial risk will become integral part

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SUSTAINABILITY, RESEARCH & RATING

Sustainability ratings and research

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GREEN SECURITISATION

Green securitisations could be one

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CORPORATE GOVERNANCE & DUE DILIGENCE

Encouraging

Encouraging and rewarding sustainability

At the United Nations Climate Change Conference in Madrid on 9 December we presented our recommendations on how the support of the transition to a sustainable economy and a carbon-neutral future can be further incentivised. 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, mobilise and redirect private financial flows to support such activities, develop new instruments and increase the number of eligible projects and help capital markets developments.

Engaging

Principles for Responsible Banking

The EBF has been one of the first endorsers and keen promoters of the Principles for Responsible banking, giving their potential to substantially accelerate the banking industry contribution to Paris objectives and SDGs.

Learn more about the principles: https://www.unepfi.org/banking/bankingprinciples/

High-level recommendations on the voluntary application of the EU taxonomy to core banking products

A joint project of the European Banking Federation (EBF) and the United Nations Environment Programme Finance Initiative (UNEP FI) to assess the extent to which the EU Taxonomy on Sustainable Activities could be applied to core banking products.

SDGs

The EBF is critically assessing the key dynamics and financing activities of European banks in order to achieve the SDGs. Our main goal is to promote best practices to assist European banks in adopting a vision and strategy aligned with the SDGs and provide a reference point regarding the current status of SDG incorporation in the EU banking sector. A report is expected in Q4 2020.

Finance against human trafficking

EBF is collaborating with the Liechtenstein Initiative for Finance Against Slavery and Trafficking (FAST) to raise awareness and mobilize our members against modern slavery and human trafficking. FAST has worked with a number of EBF members, including the Liechtenstein Bankers Association – one of its project partners – the Dutch Banking Association and the Swiss Bankers Association to help financial institutions access practical tools to use in this effort.