July 18 2017
Position of the German Banking Industry Committee on the EU interim report on sustainable finance: Incentives for investment are appropriate; unnecessary regulation should be avoided
At the end of last year, the European Commission established a high-level expert group to give advice on the Commission's sustainable finance initiative. The group delivered its first interim report on July 13, 2017, which will be discussed today at a public hearing of the Commission in Brussels. The German Banking Industry Committee regards the interim report and the work of the expert group as an important contribution to the debate. German banks already play an important role in stimulating investment and creating jobs by lending to businesses. The German banking industry also provides a range of sustainability-oriented financial products and services to underpin the sustainable development of the economy at a time of climate change and the switch to renewable energy sources. These include green bonds, for which standards have already been developed through industry initiatives such as the Green Bond Principles, and savings certificates issued to fund green projects (Klimaschutzbriefe) that are offered particularly by regional banks to broad sections of the public.
As a general principle, regulatory intervention should be kept to the absolute minimum necessary. Indirect regulation of the real economy by making it mandatory for lenders to take sustainability requirements into consideration, particularly in the area of corporate funding, must not be allowed to inhibit the ability to innovate. And the regulatory requirements – which currently pose a considerable burden on the banking industry – must not become even more onerous. In view of the extensive obligations regarding non-financial reporting recently introduced in connection with the implementation of the Corporate Social Responsibility Directive, the non-financial reporting that will be required as from the 2017 financial year onward should be assessed before any further extension of reporting obligations is considered.
The German Banking Industry Committee believes that a better approach would be to encourage the market to develop a long-term sustainability mindset through targeted incentives. The Committee unconditionally backs the interim report's finding that greater engagement of the banks in long-term infrastructure finance requires a regulatory framework that remains stable over the long term.