What is it about?
The European Union is developing new rules to ensure the financial sector supports sustainability and new ways to finance the transition toward a more ecologically oriented future. The European Commission is responsible and would like to hear what you have to say. It is holding a public consultation which runs till 15 July. The answers will be used to help shape the Commission’s strategy proposals in Autumn 2020 and setting the direction of travel until 2024.
This is a key opportunity to join in the debate!
Tell the EU what you as a citizen want. The more EU citizens respond, the bolder, more inclusive and people centred these proposals are likely to be.
How can you make a difference? Answer 5 Questions!
The consultation may look rather long, however you only need to answer the first five questions to make a difference. The rest of the questions are mostly geared towards experts. Just by answering the first five, you have given the EU a reason to focus harder on delivering a green, sustainable future. We anticipate that if many people respond, it should give the EU a mandate not to listen to the financial lobby which, regrettably, is pushing for non-binding and weak sustainable finance laws – and whose strength lies in answering consultations such as these!
That is why Change Finance wants to help you.
If you use our template, answering the consultation should not take more than 10 minutes. Obviously we encourage you to make your own comments and adapt your responses as you see fit.
What should I answer?
Ideally we would like you to tell the EU what your thoughts are, and not just what we think. But we do believe in strong proposals and clear rules, which will help finance to become greener and provide a level playing field at the same time. Voluntary codes rarely work, as the competition can often make more money by not pursuing a green and sustainable agenda.
Below is our guidance for responding to the consultation.
Answering the questions
Estimated time: 5-10 minutes.
1. Go to this address.
2. Click on “Register”.
3. Fill in the information required and click on “Create an account”.
4. Now your account is set up and you can participate in the consultation.
5. Fill in your details (Section: About you).
6. Answer the 5 questions of Section I (Section I: Questions addressed to all stakeholders; See answers below).
7. Proceed to the end, by clicking on “Additional information”.
8. Click on “Submit your answer”.
Note: If you somewhat adapt these answers below, the EC will consider each of your answers separately. If not, the EC treats all similar answers as one!
Naturally, if you have time and expertise, feel free to answer the rest of the questions.
Suggested answer: Option 1: Major additional policy actions are needed.
Explanation: Basically the EU asks whether more policy actions are needed beyond what is already done and planned. We think that the EU is getting on the right track (with the Action Plan on Financing Sustainable Growth), but is acting very slowly and still failing to implement the major policy actions that are needed to address the climate emergency.
Question 2 – No
Question 2.1 – Yes
If you want to fill in the answer box, we also have a few suggestions on what the EU might do to better regulate banks and pension funds. You are welcome to include them. If so, you can Copy, Paste & Adapt the following within 2,000 characters:
Consumers are not offered sufficient information on how far sustainability criteria are incorporated in their investment products, pensions or bank savings. They don’t know what their savings are financing and what their environmental and social impacts are. Today, the information provided to non specialist investors is often incomplete, rarely accessible, and incomprehensible to all but those with a technical background.
Even when some sustainability criteria are mentioned, often no details are available about the specific projects/companies that are being financed. There should be clear information on what basis non-sustainable activities and companies are excluded (or not) and what the positive environmental and social impacts are. For that purpose, in order to identify non-sustainable activities (socially and environmentally), a common and binding framework should be built at the European level, starting with fossil fuels and the most polluting activities.
To avoid greenwashing, all green investment products should be legally obliged to adopt EU standards for sustainable products (no free riders). Beyond green finance, the banking sector as well as the investment industry should equally be transparent and regulated so that customers have a proper overview of the climate impacts of their savings.
Moreover, it is important that sustainability criteria are set high to have a real positive impact by preventing and halting climate change and socially abusive practices. We must set those in accordance to the target set in the Paris Agreement of a 1.5°C path.
Lastly, to encourage financial service users to choose sustainable investment products, the options for investment in environmental and social sustainable activities and divesting from non-sustainable activities should be upfront, as default options, and clearly spelled out to customers.
Explanation: Pension funds are among the largest investors in our society. So are banks using your savings and allocating loans. As your money is involved we assume you want this money to be used towards a positive and sustainable end, as well as provide you with financial security later on in life.
Currently it can be a challenge to find out what your pension fund, bank or insurance company really invests in. We believe you should be able to readily access this information with ease. Banks and pension funds should be required to report transparently and clearly how they contribute toward a sustainable and green future.
Suggested answer: Yes
Explanation: At the moment, it is not always easy to make sure your money is used in a green and sustainable manner. We think that banks and financial advisors should provide you with green and sustainable options first, and give you all the options, before assuming you’ll be okay with polluting or non-sustainable investments.
Suggested answer: Yes, both
Explanation: In Paris in 2015, the EU and their member states, together with over 150 other countries agreed on measures and goals to save our environment and limit global warming. Governments have promised to do their best for our common future. Corporations and financial institutions however have not yet done so, and we need their support and investment too. So yes, we believe that they should at the very least be required to report on how they plan to help achieve the Paris Agreement goals, and act on these plans accordingly. Both corporations and financial institutions have a responsibility in this respect.
Suggested answers: Strongly agree (5) to both statements
If you want to fill in the answer box, we also have a few suggestions on what the EU might do to achieve this goal. If so, you can Copy, Paste & Adapt the following within 2,000 characters:
Systemic changes are needed to align finance with the Paris Agreement. The EU should create the necessary legal framework to identify the most harmful activities from which the financial sector has to progressively exit from: 1) The EU should make a list of activities fostering climate change and biodiversity losses by creating a brown taxonomy that defines what climate and environmentally harmful activities are. It will help investors and bank clients to know what harmful activities they don’t want to finance. 2) Since investors’ engagement, voting and discouragement will not be enough, the EU should phase in a law that prohibits investments and loans for new fossil fuel projects and once available activities in the brown taxonomy that are incompatible with a 1.5 degree trajectory. 3) It is critical that the EU better integrates in its strategy social objectives to its environmental ones. It should establish a social taxonomy, to identify socially abusive activities (e.g. breaching labour rights) that shouldn’t be financed.
This must quickly lead to new financial regulations penalising the financing of environmentally and socially harmful activities. This framework should be applied in a binding way by all European financial institutions including when financing activities outside of the EU. It should also be used within other EU policies: 1) Laws to finance a COVID-19 recovery must bear social and environmental conditions so that investments and banking activities speed up the financing of the just transition. 2) Fiscal tools must penalize socially and environmentally harmful activities. For example, with a tax on aviation fuel or flights, or a targeted financial transaction tax on fossil fuel companies’ share trading. 3) The monetary policy of the ECB must change so that its QE and COVID-19 programme exclude the most polluting sectors (coal, oil and gas), the development of new fossil projects, and the development of agrochemicals and industrial agriculture.
Explanation: As the EU can make regulations for investors, they can help these investors choose the more sustainable, greener, renewable options like wind and solar energy, recycling and energy-saving. With these regulations, they can also provide a level playing field, where all investors can work toward a better future, and not be forced by the market to become more polluting or less sustainable. We strongly agree that the EU should encourage investors to support more sustainable businesses, and we strongly agree that the EU should discourage investments that further harm the environment.
Thank you for your contribution! Yes you can help more. Share this website with your friends and family, so that many more will have an opportunity to shape the future. If you are an expert, you might want to answer a few of the other questions.
Without money, it’s very hard to get things done in our world. If we want our economy and lives to be more sustainable, greener, climate friendly and people-friendly, we need money. And banks and investors have lots of money. But as long as one can make much more money with non-sustainable investments that harm people and planet, any change will be much harder.
Here are the main takeaways we want the Commission to include in its sustainable finance strategy:
1. A clear definition of activities that significantly contribute to climate change (“brown taxonomy”) will help divest from the economic sectors not in line with a 1.5°C trajectory (Consultation questions 31, 82, 83);
2. The creation of a “social taxonomy”, to make sure financial actors also take into account the social and human rights impacts their decisions have (Questions 8, 44, 46, 47, 48, (91));
3. Greater transparency: improved, reliable and compulsory disclosure and reporting (Questions 21, 25, 28, 29, 31, 52, 70-72, 81, 99, 102);
4. Strong legal obligations – and not a mere voluntary framework – to finance sustainable activities, in the EU and beyond (when EU actors finance activities overseas) (Questions 7, 12, (16, 22) 62, 76, 77, 86, 87, 88, 89, 91, 92).
5. The implementation of these future legal standards to all financial actors (banks, investors, insurances) including public ones (i.e European Central Bank) on a compulsory basis.
We believe these tools are central to EU financial institutions’ divestment from socially harmful and climate change inducing activities and companies.
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