Climate change is also challenging the financial sector. The demand for “green” systems is increasing, the term “sustainability” is on everyone’s lips. But what exactly is that?
According to Bank President Christian Sewing, the financial sector takes the challenges of climate change very seriously.
“The financial industry is now using a lot of resources to make sure that what we call green is really green,” said the Deutsche Bank boss in his fun campaign as President of the Association of German Banks (BdB) in the Interview with the news agency dpa.
Of course, there are still uncertainties and questions in a developing area like ESG (environment, social, governance), in which the standards have not yet been set. But: “All market participants are aware of how dangerous allegations of greenwashing are,” said Sewing.
Resistance to “sustainable” gas
The EU Commission wants to create a kind of catalog for climate-friendly investments, the so-called taxonomy. Among other things, the Brussels authority has proposed that investments in gas and nuclear power be classified as sustainable financial investments for the time being. But resistance to this is not only coming from environmentalists.
“We should agree on the taxonomy as quickly as possible and please don’t make it too complicated,” warned Sewing. “It has to be based on principles and not regulate everything in detail. Unfortunately, Europe is currently running the risk of regulation taking over the fine-tuning.”
Sewing emphasized: “We must allow companies to transform. My concern is that people simply say: “brown or green”. But the path from brown to green is particularly important. This is where we have the greatest potential to avoid CO2. We have to finance this transformation.” From the point of view of the BdB President, it would be “wrong to punish the banks with additional capital requirements” if they finance this restructuring of the economy.
New opportunity for Europe to become a technology leader
For Europe, the fight against climate change is an opportunity to become a technology leader again in certain areas, said Sewing. However, this requires huge investments. «To finance this, we need the European capital market to attract private capital. My big concern is that if the Capital Markets Union is not completed, the Green Deal will not be financed.”
The capital markets union is essentially about removing bureaucratic hurdles between the individual EU countries in order to give companies more opportunities to raise money. Consumers should also have more opportunities for cross-border investments. Loans and financing in Europe – in contrast to the USA – are mainly granted by banks. The EU Commission’s plans for a capital markets union have been on the table since September 2015, but implementation is faltering.
Progress over the next three years important
“The next ten years are crucial if we want to achieve the goal of climate neutrality by 2045/2050. That means we need to make big strides over the next three years – and enable the appropriate investments,” Sewing said. “It’s entirely possible. It’s been a long time since I’ve experienced such dynamics and such a great willingness to talk about the banking and capital market union – in Germany as well as in Europe. That’s why I’m still confident that politics can do it.”
The attempt to make progress on the joint European deposit insurance scheme EDIS (European deposit insurance scheme) as the third pillar of the banking union, which has been discussed for years, recently failed. The idea of Edis is to secure customer funds across borders. There is resistance to this, especially in Germany, where there have long been well-stocked pots for emergencies. Savings banks and cooperative banks in Germany fear that their money will be used to finance the difficulties of institutions in other countries.
“I trust that we will find compromises,” Sewing said on the subject of deposit insurance. «The savings banks and cooperative banks also benefit from a uniform European market.»
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
