Published on 29 May 2017

SUSTAINABLE FINANCE

Under government pressure, Germany's financial industry takes first tentative steps in green finance

On 24 May 2017, Deutsche Börse, which operates the Frankfurt Stock Exchange, unveiled an initiative to promote green finance in Germany's financial markets. Presented as a voluntary commitment, it aims to support the German government's efforts to place green finance high on the agenda of the G20 Hamburg summit to be held in July of this year.


@Deutsche Börse

“It was time for the Frankfurt Stock Exchange to make a commitment to responsible finance,” says Günther Bräunig, who heads financial markets and asset management at state-owned development bank KfW. 

On 23 May 2017, Deutsche Börse CEO Carsten Kengeter presented an initiative titled the Frankfurt Declaration. Michael Meister, Parliamentary State Secretary at Germany's Federal Ministry of Finance, attended in person to show support.

Germany lags behind

The initiative is open to all stakeholders wishing to support responsible finance, whether they are financial players or members of civil society. To date, the Frankfurt Declaration has been signed by 37 institutions including Allianz, Societe Generale, Commerzbank, Union Investment and the WWF. Less than ten are exclusively German asset managers. This ratio is highly representative of the situation in Germany today. While the word “lagging” was not uttered, the participants all reiterated the need to “accelerate” the commitment of Germany's financial industry to responsible finance.

Much remains to be done. “So far, no content has been finalised. That will be the task of the working groups,” adds Deutsche Börse's CEO. But no concrete commitments have been made, no priorities defined, no financial instrument identified. Questioned by the press, the organisers admit that no date had been set for the first working group meeting. It is not even clear whether it will take place before early July's G20 summit in Hamburg.

It is a pity that this roadmap remains so unclear considering that Chancellor Angela Merkel and Minister of Finance Wolfgang Schäuble have placed green finance high on the G20's agenda. “Similar to what COP 21 did for climate finance in France, the G20 in Germany should help boost the presence of German investors in the green finance sector,” sums up KfW's Günther Bräunig.

German government takes a vigilant stand

He points to the difference in the volumes of green bonds issued in France versus Germany: France totalled $31.3 billion, compared to $17.7 billion in Germany, according to the KfW in its May 2017 German Green Bonds Report.

Parliamentary State Secretary Michael Meister bangs his fist on the table and warns: “We hope that the financial sector will take green finance seriously enough to not leave it confined to their public relations departments.”

Frankfurt joins an already-long list of financial centres, including Paris, London and Luxembourg, that have sought to turn green finance into a key competitive asset. Paris hopes to take the lead in the competition and will announce its own bid on 13 July.

Claire Stam, Germany correspondent, @stam_claire


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