Published on 18 May 2018

SUSTAINABLE FINANCE

Climate change: a political and financial challenge for Europe

Good news : the climate is a priority for the European Union 2021-2027 budget framework, published on 2 May. Climate will represent a quarter of all programs, 5 % more than the previous period (€117 billion over 7 years). However, the framework does not detail any measures for eliminating fossil fuel subsidies or prohibiting carbo-intensive infrastructure. Thus, efforts are simply not good enough for highly engaged NGOs and MEPs.

Budget europeen environnement 01
The European Union presented its framework for the 2021-2027 budget.
@UE

"Put the whole European budget to the climate test." This was the request made in an open letter to the President of the Commission by some thirty environmental organisations. They called on him to "align EU financial flows and tax incentives with the objectives of the Paris Agreement" to limit global warming to 2°C by the end of the century.

At least these organisations were heard regarding one point: increasing the budget share devoted to this objective! That said, many were hoping for more than a 25 % allocation.  On 22 March, at the launch of the Commission’s Action Plan on Sustainable Finance, Emmanuel Macron not only mentioned allocating 40 % of the budget to this objective, but also stressed the need to make the entire European budget consistent with these goals. "We must set a goal of contributing to the ecological transition, and most notably, ensure that no expense is hostile to the climate," said the French president. The Commission is not quite there, even if political pressure is strong.

The European Parliament voted on 14 March for a resolution that encourages the European Union to devote at least 30% of its budget to the fight against climate change. The own-initiative report by the Economic and Financial Affairs Committee urged the Commission to go further than its Action Plan on Sustainable Finance. They want to see European financial markets harmonised to significantly increase green investment volumes and divest from fossil fuels.

The environment: a geopolitical issue

The report was overseen by Green MP Molly Scott Cato. As someone very committed in this fight, she believes that "Europe must seize its chance to become the world leader in sustainable finance by having stronger ambitions that allow it to finance an economy in line with its environmental and social commitments".

Making Europe the engine for tackling climate change and protecting the environment is a crucial geopolitical issue. It should be at the heart of next year's European election debates in all EU countries, provided candidates take hold of the subject. If they do not do so voluntarily, they may be required to do it legally.

"2018 is the year of climatic trials and the courts are at frontline in the battle for the climate", stated several NGOs on 7 May, which are all in the process of filing a legal suit against five European governments for climate inaction: Ireland, the United Kingdom, The Netherlands, Belgium, Switzerland and Norway. A first court found them in the right with their suit against the Dutch government, which later appealed that decision. Even if case law is yet to be established, there is already a citizen combat: 35,000 of Belgians are stakeholders in the collective action on climate in their country.

Anne-Catherine Husson-Traore,  @AC_HT, CEA of Novethic


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