GERMANY AIMING TO TAKE THE LEAD ON SUSTAINABLE FINANCE

GERMANY AIMING TO TAKE THE LEAD ON SUSTAINABLE FINANCE

In February 2019, the German state secretary committee for sustainable development took a number of decisions that should help Germany take a leading role in Sustainable Finance. However, with plans at the EU level that have already progressed much further, it seems that German government will have some catching up to do. In this article, we will provide a short summary of the federal government’s plans.

Sustainable Finance is a key factor for the transformation and execution of Agenda 2030. That was the conclusion of the International Peer Review 2018, which was commissioned by the federal government. Sustainable Finance also has a huge role to play in achieving the Paris Agreement and the Sustainable Development Goals (SDGs).

Sustainable Finance is all about taking into account environmental, social and governance (ESG) considerations when making investment decisions. The goal of sustainable finance is to stimulate a transfer of funds into sustainable sectors. In doing so, sustainable finance puts pressures on industries to reduce their environmental and social impact, stimulates innovation and makes it easier for sustainable companies to attract funding.

Even without political pressure, it makes sense for financial market participants to consider sustainability aspects in decision processes as climate change and the corresponding economical changes also challenge their existing business models.

The plans of the federal government

The federal governments’ plan is to put together an advisory council involving representatives from finance, the industry, civil society and academia. They will be asked to advise the federal government, improve knowledge on this field and give important impulses to strengthen Sustainable Finance in Germany. The agenda will be put forward towards the middle of 2019. An exchange of experience with regard to sustainable finance investments of the federal government itself is also in the works. The council will also investigate whether issuing federal green bonds would be cost-effective.

However, if Germany is to fulfil the ambition of taking the lead in the field of sustainable finance, it has its works cut out: although the EU Action Plan: Financing Sustainable Growth was published in March 2018, the country does not currently have a roadmap for implementation. Will the recent actions change this? Subscribe to our monthly newsletter to find out.

 

Source: DQS CFS website (https://dqs-cfs.com/2019/03/germany-aiming-to-take-the-lead-on-sustainable-finance/). For more information, please send email to info@dqs.com.my.