Bloc’s sustainable finance agenda hangs in limbo, say panellists, flagging lack of policy coordination.
The board chairman of Allianz, the global financial services provider, has urged EU politicians to implement rigorous measures such as a carbon border tax and boost the sustainable transition.
“We are often underestimating our power. If the EU decides for example to have a carbon tax at the border, it will change the world, because we are the biggest economic zone on the planet,” Oliver Bäte said, speaking at a virtual event, organised by media organisation Project Syndicate.
The European Commission currently works on a proposal for an EU carbon border adjustment mechanism (CBAM) as part of its Green Deal to reduce the risk of carbon leakage. It is expected to be presented in the second quarter of 2021.
Bäte also said that measures such as disclosure standards are required and that EU investment flows need to be directed away from fossil fuels towards sustainability.
“[EU sovereign wealth funds] are making all the money with oil and [other] fossil fuels, but they are not forced to invest in a net-zero sustainable way. The political leadership has to step up and say: how come that public pension funds are not net-zero committed?
“We should mandate that all public and private investments, over time, have to go into a sustainable way of investing,” he said.
Fiona Reynolds, CEO of the Principles for Responsible Investment (PRI), also emphasised the importance of overall coherence of EU policies.
“We need to ensure that EU policies and not just sustainable finance policies are aligned to the EU’s 2030 and 2050 targets and that includes finalising and adopting an ambitious EU climate law,” she said.
Meanwhile, she emphasised that investors need credible standards for their investments.
Reynolds said that “the environmental integrity” of the taxonomy needs to be preserved as it is being finalised, “so that markets can trust it”.
“It really needs to remain based on scientific evidence to be credible for investors. Investors want to see the EU holding itself to the same standard that they are being held to,” she said.
The delegated acts for the EU taxonomy were originally planned to be published at the beginning of this year. But they were delayed because of member states threatening to veto it, if it didn’t include gas as a transition fuel, a media report said.
Maarten Verwey, Director-General of Economic and Financial Affairs (ECFIN) at the European Commission, agreed that investors need clarity and more has to be done, including green public investments.
“Indeed, there is this very clear need for standardisation. First, it’s very important that there is no clarity on the  target.
“I think markets need a sense of direction. We need to have clarity on the labelling, on the taxonomy, on the risk reporting and that allows then the private sector to do the investment in the right direction.”
At the same time, he pointed out that the speed on sustainable finance regulation is accelerating, especially under the current EU Commission.