Green finance ‘best way to reset EU for long term growth’

Sustainable finance could provide the best opportunity for the EU to rebalance its financial system for long term growth in the aftermath of the financial debt crisis. That’s according to […]

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By Jonny Bairstow

Sustainable finance could provide the best opportunity for the EU to rebalance its financial system for long term growth in the aftermath of the financial debt crisis.

That’s according to a new report from the EU’s High-Level Expert Group on Sustainable Finance, which sets out how best to create a financial system that can support green investments and so move towards a low carbon, efficient and sustainable economy.

It identifies two main needs – the first is to strengthen financial stability and improve the assessment and management of long term risks and opportunities.

The second is to increase investments in innovation and infrastructure based on this information.

The report suggests this can be achieved though enshrining sustainable requirements in the legal duties of company directors and investors, advancing decision-making tools such as benchmarks and credit ratings and making reporting on sustainability progress more clear and comparable.

On a governmental level, it says member states need to provide a plan indicating to investors how they intend to mobilise the capital needed to meet their 2030 goals and other climate obligations.

The report adds a ‘matchmaking’ service to link infrastructure projects with suitable investors combined with a classification system defining which assets are sustainable could help achieve this.

Jyrki Katainen, Vice-President for Jobs, Growth, Investment and Competitiveness, added: “Mobilising finance from investors oriented to the long term and from capital markets is vital for the transition to a low-carbon, more resource-efficient and sustainable economy.

“We know that investments of around €180 billion (£159.3bn) per year are needed to deliver on the EU’s ambitious climate and energy goals.”