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Green finance initiatives

From HLEG to H4SF to RNE: new initiatives accelerate a stronger consideration of sustainability topics in the financial market.

290.000.000 BC: this fossil of a seed fern leaf, found in a coal mine, is around 290 million years old.

The banking sector in motion – two major goals

Since 2016, new initiatives in the financial sector have been working intensely at European and national level to achieve two major goals:

  • Stability of the financial market by raising the profile and importance of climate and sustainability issues
  • Simultaneously strengthening the sector’s contribution to a climate-friendly and resource-conserving economy

The EU Commission’s High-Level Expert Group on Sustainable Finance

On a European level, the High-Level Expert Group on Sustainable Finance (HLEG) has laid important foundations for this work. The group was founded by the EU Commission and includes experts from the financial sector among its members. At the end of January 2018, the group presented its final report, titled “Financing a Sustainable European Economy”; the report contains eight recommendations to encourage sustainable development in the financial market. These include:

  • The development of official EU labels and standards for sustainable finance instruments, such as green bonds
  • Clarifying the responsibilities of institutional investors with regard to sustainability criteria
  • The introduction of a classification system for sustainability

EU Commission action plan

In its March 2018 action plan on “Financing sustainable growth”, the EU Commission acted on the proposals put forward by the HLEG. It defined key milestones for the increased importance of sustainability criteria in the financial market. In the forefront are three objectives:

  • Restructuring capital flows towards a more sustainable economy
  • Embedding sustainability within risk management
  • The promotion of transparency and long-term planning

The plan is to implement a range of measures in pursuit of this by mid-2019. These include an investigation into how sustainability criteria can become a more significant component in ratings and market analyses. This would have a direct effect on companies.

National initiatives combine discussions

On a national level, too, 2017 saw the launch of various initiatives to combine discussions and projects, promoting a stronger consideration of sustainability criteria in the financial market. The Hub for Sustainable Finance (H4SF) was founded as an initiative of the German Council for Sustainable Development (RNE) and the Deutsche Börse Group. In partnership with other players from the financial sector, the Hub was established with the aim to improve the conditions for a more sustainable alignment of the financial market in Germany. The Sustainable Finance Cluster Frankfurt is also aiming to develop strategies and approaches so that the financial sector can support the transformation to a climate-friendly, resource-conserving economy.