EU says green finance will be ‘key focus’ of post-virus recovery phase

Valdis Dombrovskis, Executive Vice President of the European Commission at the Ministry of Economy and Finance in Rome, Italy, 31 January 2020. [EPA-EFE/RICCARDO ANTIMIANI]

As European countries fight the coronavirus pandemic, they “must not lose sight” of the EU’s climate neutrality objective, the European Commission reminded on Wednesday (8 April).

The EU executive on Wednesday launched a public consultation on its “Renewed Sustainable Finance Strategy”, part of a €1 trillion package to make the European economy greener by 2030.

“We are currently battling the coronavirus outbreak, but we must not lose sight of our long-term sustainability objectives, including making Europe climate-neutral by 2050,” said Valdis Dombrovskis, the EU Commission’s executive vice-president in charge of the economy.

“Creating a more sustainable and resilient economy will be a key focus of the recovery phase and the Renewed Sustainable Finance Strategy will be essential to mobilising much-needed capital,” he said in a statement.

EU to unveil trillion-euro 'Green Deal' financial plan

The European Commission will propose on Tuesday (14 January) how the EU can pay for shifting the region’s economy to net-zero CO2 emissions by 2050 while protecting coal-dependent regions from taking the brunt of changes aimed at fighting climate change.

The renewed strategy will aim to boost green investments by fully integrating “climate and environmental risks into the financial system,” the Commission indicated, saying it aims to adopt the updated green finance plan in the second half of 2020.

And while all attention rightly focuses on the pandemic, the long-term climate and environmental objectives of the European Union remain as relevant today as they were before the crisis, the EU executive says.

“The ongoing coronavirus outbreak highlights the critical need to strengthen the sustainability and resilience of our economies in the future,” the Commission stated.

At a summit on 26 March, EU leaders asked the EU executive to start preparing “a comprehensive recovery plan” that also integrates the green and digital transitions.

EU climate chief Frans Timmermans has since pledged to “work towards a green recovery”, citing clean energy sources as having a crucial role to play in the transition.

EU leaders back ‘green transition’ in pandemic recovery plan

While attention continues to focus on the urgent health aspects of the COVID-19 outbreak, EU leaders have called on the European Commission to start preparing “a comprehensive recovery plan” that integrates green and digital aspects.

The strategy will build on previous initiatives such as the Commission’s 2018 Action Plan on Financing Sustainable Growth and the reports of the Technical Expert Group on Sustainable Finance (TEG), the EU executive said.

E3G, a climate think tank, said the importance of green finance could not be overstated, adding it will help shape Europe’s economic recovery in the wake of the current health and economic crises.

“The Sustainable Finance Strategy will play an important role as Europe moves from stabilisation to the stimulus and recovery phases, ensuring that the recovery is green and sustainable in line with the vision set out under the European Green Deal,” said Kate Levick, sustainable finance program leader at E3G.

One significant aspect, she said, is the Commission’s intention to widen the scope of green finance to reach beyond the EU’s borders.

The new strategy “puts forward an ambitious global dimension with a strong role for Europe’s external financial mechanisms,” Levick said.

“The international element of Europe’s new strategic approach is hugely welcome. Multilateral action is key to directing financial flows to where they are needed, and to building resilience into the financial system,” Levick said.

The public consultation is available online here and open until 15 July 2020

Governments urged to attach green strings to long-term coronavirus recovery plans

Governments and financial institutions are under growing pressure to make economic bailouts designed to counter the coronavirus pandemic dependent on climate action in the longer term. EURACTIV’s media partner Climate Home News reports.

[Edited by Benjamin Fox]

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