Paul Tang questions why bank lobbyists are seeking to delay transparency measures that they have publicly endorsed.
Paul Tang is an MEP in the Socialist and Democrat group and a member of the Economic and Monetary Affairs committee
With the ‘FridaysForFuture’ protests, idealism has triumphed on the streets. Bankers’ boardrooms and financial towers, however, are still rife with cynicism. At the UN General Assembly in New York last month, while bank executives committed to bringing their lending practices in line with UN Sustainable Development Goals and the Paris Climate Agreement, their lobbyists in Brussels tried to block the implementation of key legal measures that would promote the sustainable banking practices they publicly endorse.
The disclosure regulation stimulates financial companies to look beyond short-term profitmaking by obliging them to disclose how environmental, social and governance considerations feed into their decision-making. The regulation forms an essential part of the Commission’s Action Plan on Sustainable Finance, which was conceived in close collaboration with experts from civil society and industry and seeks to turn the financial sector into an engine for sustainable growth. EU co-legislators succeeded in agreeing on this file before the end of the last legislative mandate – a big win for the Commission, where Mr Dombrovskis was in the lead, the Parliament, for which I led the negotiations, the Romanian Council presidency, and of course for the future of our planet. If investors pay more attention to people and planet, money will move from damaging to more sustainable economic activities, benefiting us all.
While publicly, banks were supportive of the disclosure regulation, in private they sought to water down some of its key provisions. As a result, disclosure obligations are, for example, limited to only the largest asset managers, i.e. those with over 500 employees.
However, in a familiar pattern for the financial sector, concessions were all but acknowledged before new demands were made. Thus, in the very week that banks such as ING, Citi, BNP Paribas and Danske Bank agreed that they “must be transparent and clear about how their products and services create value for … society”, lobby groups representing these banks asked the Commission to prevent “legal uncertainty” by postponing the implementation of disclosure obligations.
At a time when it becomes increasingly clear that urgent action is required to prevent global warming from reaching a point of no return, postponing the implementation of the disclosure regulation would be a terrible signal to protesting youth around the world, and bad news for us all. Consumers want to know the sustainability impact of their investments and citizens demand that investors focus on people and planet, not just profit.
To achieve this, it is key that that both the Commission and the Finnish Council presidency remain steadfast in their efforts to ensure that the regulation can enter into force within the timeframe foreseen. The Commission should not cave in to industry demands by putting a break on the development and application of regulatory standards and the Finnish presidency should put the final text of the Regulation to a vote without delay. This will allow for the text to be published, timelines for the drafting and implementation of standards to be set, and for industry to obtain the regulatory certainty they so desperately demand. It would also form a strong signal to the incoming Commission: that Member States are serious about showing the leadership necessary to move towards a sustainable future, and demand the same from von der Leyen and her team.