The European economy is recovering – albeit slowly – and sustainable finance may just be a major component of growth. The urgent need that exists to invest capital into sustainable infrastructure and technology may contribute to driving job growth in European nations. Individual investors, as well as national institutions, are prioritizing the need to invest in sustainability. The new movement is sure to become a contributing factor in Europe’s overall economic growth.
Individuals, companies, and central banks are supporting the transition to a greener economy. Surprisingly, Europeans are putting more of their savings in assets supportive of sustainability, while European financial institutions recognize the importance of sustainability in their business models. According to Achim Steiner, Executive Director of the United Nations Environment Program, the transition has been underway for sometime but has quickened since Europe’s major climate agreement. This and other international agreements have signaled to global markets the importance of sustainability and environmental concerns on future global developments.
Some major European institutions are already attempting to influence financial policymakers. The Bank of England has delivered an assessment of what climate change can mean for the insurance sector. France has introduced new labels to help consumers choose financial products that are sustainable, or at least, sustainability-oriented. Other countries like Spain, Germany, and Portugal have undertaken similar policies. Sweden, on the other hand, has enacted policy to link the financial world with sustainable development.
According to Steiner’s article, the European Fund for Strategic Investment approved 42 new projects, of which more than half of those are sustainability-related. Climate action, resource efficiency, and sustainable development are some of the included components. The Capital Markets Union even provides easier access to sustainable finance through financial instruments like green bonds, which facilitate financing of renewable energy and energy efficiency projects. Major European companies like Allianz, and Amundi are committing themselves to these greener initiatives by aligning their portfolios with carbon-reducing assets.
Key elements of these efforts include an array of other financial strategies. These include: “reallocating capital, assessing risk, clarifying responsibility, and improving reporting. ” The movement is becoming global as well. China is hoping to raise 400 billion in green investments every year for five years, mainly from financial and capital markets.
Green finance is becoming a reality, and as global concerns of climate change continue to rise, so will the need for financing in sustainable projects. If you liked this post and would like to read more about global finance, check out my twitter @DavidEMickey for more.
David E. Mickey is a financial executive based in Buffalo, New York, and he’s an Enterprise Sales Executive at Docupace Technologies. Please visit his websites to learn more: http://davidemickey.com; http://davidemickey.net/; and http://davidemickey.org/.