Capital Markets Union package: strong measures on sustainable finance and financial innovation
The EU Commission presented its package of measures to deepen the Capital Market Union. This includes proposals on FinTech and crowd- funding, covered bonds and the cross-border distribution of investment funds. The package also includes an action plan on sustainable finance. Priorities of this action plan are a classification (?taxonomy?) and a label for sustainable financial products as well as prudential regulations for banks and insurance companies. The Commission plans to publish a legislative package on sustainable finance in May.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented: “Our demand to systematically promote green financial markets is finally bearing fruit. The Commission’s action plan contains key projects, which are increasingly called for by large parts of the financial sector. Sustainable financial products also contribute to the climate targets agreed in Paris. Europe must now set the right standards to become the lead market for green finance. We must not let conservative sceptics obstruct this forward-looking initiative. In implementing the proposals, the Commission must ensure that its definitions and rules do not only promote good, but also actively exclude harmful investments. Nuclear and coal-fired power plants or fossil infrastructure cannot be part of any sustainable financial product; rather, they risk to ruin the reputation of this young market. A sustainable financial system can provide the right incentives as a framework, but it is not an alternative to green investments in the future and decisive environmental legislation. Financial markets can only finance what pays off. Capital adequacy rules for green investments by banks and insurance companies may only be alleviated if their lower risk can actually be demonstrated. Higher climate risks should accordingly also be backed by more equity capital. The disclosure of environmental and social factors must finally become compulsory for companies. Linking a unique label for green financial products to the EU Ecolabel is a landmark proposal and would allow small investors to make easier and more transparent investment decisions. It is right that the EU Commission takes, in principle, a positive view of financial innovations. More competition in the financial sector is also in the interests of consumers and the real economy. Where problems to consumers become visible, however, Europe must act swiftly in the FinTech sector. In the area of cryptocurrencies we must not tolerate any legal vacuum. Tough measures against money laundering and white- collar crime must become the norm here. To this end, the Commission has today failed to present proposals.”