“Think global, act local.” That is one way to summarise the task of the European Commission's High-Level Expert Group on Sustainable Finance. Over a period of several months, the group must first identify the stumbling blocks that drive today's financial system, global by essence, to focus on the short term and ignore the consequences of its activities on the real economy. It will also have to make recommendations to allow investments to be redirected toward longer-term goals and an economy with measurable environmental and social benefits on the European—and thus local—level.
The expert group, chaired by Christian Thimann, who also serves as Vice Chair of the Task Force on Climate-related Financial Disclosures and Group Head of Regulation, Sustainability and Insurance Foresight at Axa, consists of around 20 experts, including four French nationals: Pascal Canfin (head of WWF-France), Philippe Zaouati (CEO of Mirova), Stanislas Dupré (founder of the 2° Investing Initiative) and myself as CEO of Novethic.
“We have an exceptional opportunity to work closely with the European regulator,” stresses Christian Thimann. “It's a strong indicator of the importance it attaches to this issue” (watch the video below).
Promoting a common vision and framework for sustainable finance
The European Commission publishes the minutes of the group's near-monthly meetings. Accompanied by observers representing a range of professional organisations, their work revolves around six key priorities:
- shifting investment and lending practices to take into account ESG (environmental, social and corporate governance) criteria;
- enlarging the assessment of financial risk to incorporate long-term environmental and social risks, especially global warming;
- identifying the structural obstacles keeping investment decisions focused on the short term;
- promoting the development of specialised financial products such as green bonds;
- redirecting investment flows toward these types of products;
- offering a common and comprehensible vision of sustainable finance to which Europe can aspire.
“We are trying to create a framework for green financial assets,” explains Philippe Zaouati, a member of the expert group. “This means thinking about how they are created and the guarantees they should offer in environmental, social as well as financial terms. We also need to consider incentives such as certifications or specific regulations. This is needed in order to persuade investors to choose them as investments.”
The group's next steps in promoting sustainable finance include the publication of its recommendations—with an interim report aimed at the G20 to be released in early July—as well as a series of meetings including a session with stakeholders scheduled for 18 July in Brussels.