Germany hatches plan to attract green investment capital

A general view of the skyline and high-rise buildings in Frankfurt am Main, Germany, 04 August 2020. [EPA-EFE/RONALD WITTEK]

The German government is planning a new green financing strategy to steer capital towards environmental projects and developing Germany into a leading hub for sustainable finance, plans seen by Reuters show.

The so-called Sustainable Finance Strategy plan lists 26 individual measures and is due to be adopted by the cabinet on Wednesday with a view to mobilising investment for climate protection projects.

“The federal government wants to develop Germany into a leading location for sustainable finance,” states the plan, which is aligned with the United Nations’ Sustainable Development Goals.

The plan aims to support the European Union becoming carbon neutral by 2050 – a target the European Commission estimates will require €350 billion to be invested annually.

The plan also responds to investors demanding more companies complying with environmental, social and governance (ESG) criteria.

To assist investors, the German plan envisages a sustainability “traffic light” system that makes it easier to identify green investment opportunities.

Berlin wants to coordinate the traffic light plan with the EU if possible, but if it cannot move ahead quickly with the bloc it will start with Germany’s Federal Environment Agency.

EU spells out criteria for green investment in new 'taxonomy' rules

The European Commission on Wednesday (21 April) unveiled a first batch of implementing rules under the EU’s sustainable finance taxonomy, spelling out detailed technical criteria that companies need to comply with in order to win a green investment label in Europe.

The government also plans to increase guarantees and export credit assistance for green projects, and to reallocate €9 billion in equities it holds in pension and welfare funds into green investments.

With the Greens now topping most opinion polls, Chancellor Angela Merkel’s conservatives and their Social Democratic coalition partners are eager to tout their green credentials before September’s federal election.

The government envisages green bond issuance this year similar to 2020, when it launched its first two green bonds with a combined volume of €11.5 billion.

A 30-year green bond is planned for May, with a 10-year issue to follow in the second half of the year.

Germany raises €6.5 bln from first-ever green bond

Germany saw good demand for its first-ever green bond on Wednesday (2 September), in a landmark moment for Europe’s climate-focused finance drive.

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