There Are Too Many Shades Of Grey In Green Finance

There’s no escaping the growth of green finance. Every quarter charts new records for issuance of green bonds or investment in funds that describe themselves as sustainable or that follow an investment policy guided by considerations of environmental, social responsibility and governance.

Meanwhile institutional investors around the world are using their weight as providers of corporate financing to push companies toward greater respect for the environment and the welfare of employees in their own operations and in supply chains and, increasingly, to commit to reduce carbon emissions in measurable ways or set a date to achieve net zero status.

This trend is now a fact of life in the financial industry, not least because of the role of institutions in pressing companies and financial service providers to embrace environmental and other sustainability goals, as well as the determination of the EU to implement legislation to increase public accountability.

Here’s a telling data point: the proportion of global investors that apply ESG criteria to at least a quarter of their total investments has risen from 48% in 2017 to 75% last year, according to Deloitte.









Open questions about the ‘green’ in green finance





Yet, the significance of this green finance trend in changing corporate and financial behaviour is less easy to measure.

In fact, the size of the market and its different segments is open to wildly different estimates, both in terms of current levels and projections into the future.

And just how green or how sustainable some, or even most, of these investments or assets really are is an even more ‘known unknown’.

The problem is the absence of standardised, universally accepted definitions and rules setting out what constitutes sustainable or ESG investments, assets and projects — and similarly standardised mechanisms to measure compliance.

The EU’s Taxonomy Regulation, which seeks to define sustainable activities, should help to fill the gap, although it won’t be applicable until the beginning of 2022.

That’s why arguably ‘greenwashing’ — promoters awarding financial assets and products an environment-friendly or sustainable label they don’t warrant — is a lesser problem than the simple inability to determine what green (or sustainable) actually means.

The green bond market, which currently totals around €660 billion in outstanding debt, is forecast to rise to €1 trillion by the end of next year and €2 trillion two years later, according to the Netherlands’ NN Investment Partners.

However, it warns that only 85% of green bonds deserve the label; the rest are issued by companies that may be undertaking environment-friendly projects but whose practices in other areas breach environmental standards.

bar graph showing total number of new green bond issuers 2016-2019








Varying definitions of green finance





Take the investment funds numbers, for example.

Data provider Morningstar says European sustainable fund assets passed the milestone of $1 trillion during the third quarter, and global assets reached $1.26 trillion, while a record 166 new products were launched worldwide over the three months to the end of September, taking the total to 3,774 worldwide.

By contrast, the Global Sustainable Investment Alliance last year estimated that “some kind of environmental, social or governance analysis [in] investment decisions is now a factor” in $31 trillion of assets under management,

Meanwhile Optimas, a Boston-based capital markets consultancy, says the value of “global assets applying environmental, social and governance data to drive investment decisions” has almost doubled over four years, to $40.5 trillion this year. (By way of comparison, Boston Consulting Group estimates that the global asset management industry oversaw $89 trillion at the end of 2019.)

These numbers could conceivably all be correct, but it begs the question of what investments these very different totals include, how they are calculated, what constitutes the applicable sustainability or ESG principles, and how compliance with them is measured.









Misleading marketing

Some of the problems with the credibility of sustainable products are relatively easy to spot and have caught out major players like Fidelity Investments and State Street Global Advisors.

More broadly, the 2 Degrees Investing Initiative, a non-profit think-tank, has claimed that 85% of all “green-themed funds” have misleading marketing materials.

Together with the UN Principles for Responsible Investment network, the French-headquartered organisation has drawn up the Paris Agreement Capital Transition Assessment (PACTA), an online tool to measure the alignment of equity and fixed income portfolios with climate change scenarios. It says PACTA is used by more than 1,500 financial institutions worldwide, as well as by supervisors and central banks to assess the entities they oversee.

But it’s far from the only system in play and the credentials of providers aren’t always clear, notes Alessandro d’Eri, a senior policy officer at the European Securities and Markets Authority. “We have seen a boom in the number of..ESG rating and scoring providers, a largely unregulated area,” he says. “It is difficult for us to make sense of the scoring and rating if there is no clarity on the underlying methodology.”

Asset managers increasingly complain that some companies issuing green bonds are financing environment-friendly activities at the same time they’re involved or implicated in businesses whose impact is the contrary — like state-owned monopoly Saudi Electricity Company, which raised €1.3 billion from a green bond in September to install smart meters across its grid.









Constructive engagement





The Australian state of Queensland has issued bonds for initiatives including preserving the Great Barrier Reef, which is under threat from the impact of global warming, at the same time that it continues to promote expansion of its coal industry.

Others, like car manufacturers, are dressing up as green initiatives investment in production facilities for electric vehicles that they would be carrying out anyway. Still others are using green bonds to refinance investments they have already made.

Some equity investors in polluting companies or high carbon-emission industries justify their state on the grounds that it gives them the opportunity to engage with the businesses and encourage them to change their practices.

Maybe. But this, too, risks delivering an outcome that challenges quantification.

There’s no shortage of initiatives underway today to measure environmental and other sustainability factors to assist investment decision-making. The EU sustainable finance framework, which is well advanced, will progressively extend transparency requirements throughout the European financial industry, which could create the foundation for a standardised global rulebook.

Until then, though, when it comes to green finance, determining what is sustainable and what is not, what’s real and what’s greenwashing, is likely to remain as much art as science.














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ALFI PE & RE Conference 2020: Report

The Covid-19 pandemic and persistent economic uncertainty have not dented Luxembourg’s continuing growth as a centre for alternative investments, especially private equity, real estate and private debt, according to speakers at ALFI‘s PE & RE Conference 2020. The capital needs of the economic recovery are likely to give the sector a further boost in the coming months and years, while industry members point to its early commitment to sustainability and reduction of carbon emissions. Meanwhile the range of activities carried out in Luxembourg is growing in response to substance requirements – but also the jurisdiction’s deep pool of fund services expertise. Here’s a report we put together as media partners for ALFI‘s event.









Industry celebrates Luxembourg’s expanding role as alternatives hub





The economic and social disruption stemming from the Covid-19 pandemic has done little to slow the growth of Luxembourg as a hub for international alternative investment business, according to speakers at ALFI’s – virtual – annual PE & RE Conference on December 1 and 2.

Corinne Lamesch speaking at the ALFI conference
ALFI chairperson Corinne Lamesch

The 500 registered attendees heard ALFI chairperson Corinne Lamesch underline the importance of private equity and real estate to the grand duchy’s financial sector and to the fund industry as a whole in an environment that has if anything boosted demand for private assets. She cited a forecast by specialist data provider Preqin that global alternative fund assets are forecast to reach $14 trillion by 2025, with private equity accounting for $4.9trn, private debt for $1.4trn and real estate for $1.2trn.

“Regulated alternative funds in Luxembourg reached €800bn at the end of September, 17% of total fund assets – but this does not include the asset volume in unregulated funds, for which statistics are difficult to compile,” Lamesch said. A measure of the sector’s impact is the 1,160 reserved alternative investment funds launched since the regime was introduced in 2016, along with 4,320 special limited partnerships, a structure added to the Luxembourg fund toolbox in 2013.

She added: “The pandemic has impacted fundraising and short-term performance, but players are confident, if not bullish, about the long term, especially by comparison with other investment strategies – especially with initiatives underway to open alternative investments to a wider investor base.”









Economic headwinds





Screenshot of Nick Brooks
Nick Brooks, Capital Group

The industry must live with economic headwinds for a few months yet, thanks to the second wave of infection in Europe and the US, according to Nick Brooks, chief economist of London-based private debt, credit and equity manager Intermediate Capital Group. But he said: “We should be moving in the direction of normalcy by the second quarter of 2021 and see a recovery powered by pent-up demand in the second half of the year.”

Brooks argues that private capital has a key role to play in the economic rebound, with a great deal of dry powder available for investment, just as governments are obliged to start cutting back measures to support jobs and businesses at a massive cost as a proportion of GDP. “Many companies have only survived through government-backed loans and direct funding, and there will be great demand for capital later this year,” he said.

The fast-growing private debt market stands to be a prime beneficiary, says Alfonso Erhardt, founding partner of Madrid-based Oquendo Capital. “There has been a huge correction and many business models have been impacted, with sectors such as tourism and airlines particularly suffering.” Not many borrowers have sought renegotiation of terms, he says, but there have been more requests for additional liquidity, and Oquendo has urged firms to take as much state assistance as possible.

Giorgio Medda, group co-CEO at Italy’s Azimut Private Debt, says sustainability issues are increasingly central to the industry. “We benefit from the luxury of being able to cherry-pick business, but private markets are more efficient in implementing ESG considerations,” he said. “We provide a high degree of support to the economy, working with borrowers on sustainable business plans, which comes very naturally to ESG investors.”









Plugged into the data flow





Guest speakers at the ALFI conference
From left to right: Kai Braun, Sarra Huda, Fabrice Coste

Director Sara Huda says the collection and use of data is an increasingly important issue for Carlyle, which now has 40 staff in Luxembourg and over the past five years has seen SPV numbers in the grand duchy grow from 80 to 400 and assets from €5 billion to €20 billion. “We have consolidated data from our portfolio companies in a centralised function, which means Luxembourg is now plugged into the data flow. It is no longer a pure back office; data is not just being collected but interpreted here.”

Her appreciation of the advantages of the jurisdiction is echoed by Thomas Healy, chief operating officer of Swiss asset manager Kieger, which has been managing Luxembourg-domiciled funds since 2009: “Its proximity, language and culture make it ideal to target a continental European investor base. Luxembourg has a strong reputation and robust regulation, but also flexibility and the presence of global service providers. At Kieger, we also take governance and risk management very seriously.”

He also praises the CSSF and service providers for their responsiveness when the firm was merging a group of FCPs with UCITS earlier this year and moving a range of 20 funds to a new depositary and administrator: “We expected delay with these complex processes, but in fact hit all the deadlines.”

Martin Bresson, director of public affairs for industry group Invest Europe, admitted that the public perception of private equity remains “clouded”, pointing to the role of private equity in job creation and arguing: “We are a cornerstone of the European economy, not just a fringe adjunct.” He also complained about “the false dichotomy presented between finance and the real economy, as though they were not connected”.









Introducing pledge funds





A new development in Luxembourg is the establishment of pledge funds, a concept developed in the United States where rather than committing capital to a commingled pool invested at the discretion of the general partner, investors have the right to review each investment before deciding to participate.

Screenshot of Eugene Zhuchenko
Eugene Zhuchenko, ETORE Advisory

“It gives investors the ability to steer portfolio construction in a more coherent way,” said Eugene Zhuchenko, founder of ETORE Advisory, which was involved in the establishment of the first pledge fund structure in the grand duchy. “Sometimes a blind pool fund is not what investors expect. There is a risk of strategy drift, and of opportunistic investments to boost returns that could involve higher risk.”

For managers, says Arjun Infrastructure Partners’ Serkan Bahçeci, pledge funds offer the opportunity to work more closely with investors and gauge their deal appetite, although he acknowledges that it requires they have the resources and time to assess each proposed investment. And Allen & Overy partner Jean-Christian Six notes that it demands the ability to track the exposure of each investor to their particular underlying assets.

Pledge funds promise to become a new addition to Luxembourg’s alternative fund toolbox, which already offers a wide range of options, says Clifford Chance Luxembourg partner Paul Van den Abeele. He notes that whereas historically the jurisdiction was the domicile principally of main fund vehicles, today managers are also using it for securitisation, co-investment, carried interest and sidecar discretionary co-investment vehicles. 









The SFDR as game-changer





US-based global real estate manager Hines has appreciated the options offered by the grand duchy for more than a decade, says tax director for Europe Paul Taylor, noting that the $144 billion group has as many as 30 regulated and unregulated structures and around 150 special-purpose vehicles in Luxembourg. He said: “We have been focused on Luxembourg for a long time because of its flexibility and the quick time to market for unregulated vehicles.”

Next March, the Luxembourg fund industry faces the start of reporting under the EU’s Sustainable Finance Disclosure Regulation. Said Linklaters partner Hermann Beythan: “It is a game-changer that goes to the heart of private equity and real estate – what funds invest in and why. Managers will have to examine not just the impact on their processes but the value of their investments, such as buildings located on a shoreline.”

Fidelity International’s head of EU public policy, Natalie Westerbarkey, says the real estate sector has a wide range of avenues for making its assets more sustainable, including renovation and retrofitting of buildings, tenant engagement and involvement in international industry initiatives. “There is a lot of awareness of environmental and social issues in Europe, but there is scope for improvement elsewhere in the world, especially in Asia,” she said.









Open architecture model





Three speakers at the ALFI conference
From left to right: Claude Niedner, Josephine Andonissamy, Xavier Zaegel

Industry members are also preoccupied by the ongoing European Commission review of the Alternative Investment Fund Managers Directive. Arendt & Medernach partner Claude Niedner argues that the push by the European Securities and Markets Authority for closer regulation of portfolio management delegation to non-EU jurisdictions should not put at risk the global competitiveness of the AIFMD regime: “Do we want to keep an open architecture model, or European funds with European managers for European investors and European assets? We should not try to fix what isn’t broken.”

Screenshot of Jeff Rupp
Jeff Rupp, INREV

At the same time, they are sifting the issues thrown up by the Covid-19 pandemic and the successive economic lockdowns. Jeff Rupp, director of public affairs for industry body INREV, says the pandemic has accelerated existing trends, such as the increasing importance of the logistics sector and rising investor interest in debt funds. But he warned there may be further consequences to come as ‘normality’ returns: “With a surge in public borrowing and pressure on EU countries to raise more revenue, real estate may represent an easy target.”

Sven Olaf Eggers, CEO of Stuttgart-based real asset fund manager AIF, says this year has brought home that digitalisation is not a panacea in itself, but a means to an end. “We need not just data but correct data, and interfaces for the interaction of portfolio and risk management. The fact that high street retailers with apparent sound business models and ratings are going bankrupt demonstrates the need for smarter data.”










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ALFI London Conference 2020: Report

Sustainability is fast-becoming a key focus in asset management. Last week’s ALFI London Conference was full of great online discussions and fascinating insight from speakers on key related topics, from Brexit to fund regulation to fiscal and monetary policy to the impact of Covid-19. Here’s a report we put together as media partners for ALFI‘s event. Take a look at their site to see if you’d be interested in any of their upcoming virtual conferences.

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Shaping the fund industry’s future: Covid-19, sustainability – and Brexit





With negotiations on a future trade deal between the European Union and the UK government seemingly on tenterhooks, Brexit cast an understandable shadow over ALFI’s annual London Conference on November 23, a virtual event that attracted around 1,000 registrations. Speakers such as ALFI chairperson Corinne Lamesch emphasised, however, that the close relationship with Luxembourg’s asset management sector is destined to endure: “We will continue to work together with UK fund sector whatever the outcome of the trade talks.”

The Covid-19 pandemic may have shaken up working patterns, changed the economic environment significantly and influenced investment strategy trends, but so far it has not dented the sector’s positive outlook. Lamesch noted: “Luxembourg’s fund industry has demonstrated its agility and resilience – after an 11% drop in March, assets have rebounded to close to their January record high.”

Graph of net assets under management in Luxembourg funds




Finance minister Pierre Gramegna says Luxembourg has a more interdependent relationship with the UK than other European countries. “Brexit is not on the minds of many EU policymakers, but I am an exception,” he said, noting that Luxembourg has been well placed to help UK financial businesses adapt to the new legal environment: “We have had four years to prepare for the end of passporting and the need for UK institutions to create an EU presence. And we see a trend toward use of Luxembourg law for bonds because it is close to English common law and offers both flexibility and legal certainty.”









Rebuilding bridges





While industry members believe an agreement that will minimise disruption for the financial industry should be possible, they warn that deadlock could lead to a damaging loss of trust. Said Luxembourg for Finance CEO Nicolas Mackel: “The election of Joe Biden is a game-changer tipping the balance toward a Brexit deal, reducing the risk of the UK slamming the door, but the time left for implementation is getting short”.

“A Brexit deal is important to the financial services industry because it will change the atmosphere between Britain and the EU. Without a deal, acrimony could last for a couple of years, and it would be more difficult to rebuild bridges.” Mackel was echoed by Schroders’ head of public policy Sheila Nicholl: “We need trust and co-operation, and without a Brexit deal that will take time to rebuild.”

Chris Cummings, CEO of the UK’s Investment Association, added: “We need a permanent structured dialogue with the EU to share ideas, compare notes, and ensure no unwelcome surprises.” But head of European compliance Christopher Dearie says private equity firm Apollo Management is worried about national differences within the EU that could undermine single market opportunities even for firms which, like Apollo, have established substantial operations in EU jurisdictions to prepare for Brexit.









Overseas Funds Regime





In the meantime, regulators are adapting to the separation of the UK from the EU single market rulebook. Nick Miller, head of asset management supervision at the UK’s Financial Conduct Authority, says the regulator is drawing up an Overseas Funds Regime as the long-term successor to the FCA’s temporary permissions regime to prevent short-term market disruption.

“Our aim is to maintain high standards but to be open to partners in the EU and elsewhere to offer retail funds in the UK,” Miller said. “The onshoring of EU rules will stop because we need to ensure our regulation is appropriate for the UK market. We will develop a UK green taxonomy, which may not be exactly the same as the EU’s, but will target similar outcomes.”

CSSF head of funds supervision Marco Zwick, meanwhile, is focusing on the implementation on March 10 next year of the EU’s Sustainable Finance Disclosure Regulation. “The SFDR will be a big challenge for the sector and for regulators, and everyone will have to move fast. We are defining a fast-track process for prospectus updates, because the EU rules give no leeway on the deadline.”









Tectonic shift toward ESG





SFDR compliance is just one aspect of the challenge facing the asset management industry in incorporating sustainability into its strategies and operations. “We need to show clients we care about sustainability and to translate that into investment decisions,” said Aviva Investors’ global head of product strategy Steven Blackie.

“There has been a tectonic shift toward ESG, which now underpins every investment strategy in a way not seen two years ago, and we’re only scratching the surface.” This could affect the industry in less obvious ways: “As investors demand environmental and social outcomes, this could tip the balance back from passive toward active management.”

Fidelity International CEO Anne Richards points to the problem of a lack of consensus on sustainability standards and definitions. “I’m less worried about greenwashing than about confusion over what constitutes green investment,” she said. “Managers are having to figure out what’s right – for example, some advocate engagement with fossil fuel companies to effect change, while others simply exclude them. We need comparable and consistent criteria and measurable characteristics. At present there are so many different taxonomies – what we need is something that looks like accounting standards.”









Fiduciary duty





Schroders’ head of Europe Karine Szenberg is confident, however, that the trend is unstoppable, and it implies a new role for asset managers. “Sustainability and stewardship are completely interconnected,” she said. “Initially the focus was on governance, but environmental and social impact are now equally important. Today unsustainable businesses and sectors have nowhere to hide.”

That’s reflected in the surge in demand for sustainable products from investors; a recent PwC study forecast that ESG considerations could drive up as much as 50% of all European fund assets by 2025. James Broderick, a board member of the London-based Impact Investing Institute said: “Growth of 30% a year should be an opportunity, although for asset managers that are not ready it represents a threat.”

The shift toward sustainable investment may have been slowed by a narrower definition of fiduciary duty in the UK and US, which excludes non-financial considerations, than in other European countries. But European Investment Bank senior adviser Nancy Saich believes this may be about to change – especially with the change of administration in Washington. “A World Economic Forum report at the beginning of this year found that the biggest global economic risks were all related to the environmental and climate,” she said. “Not to embrace sustainability means ignoring major risks.”

Fund service providers face other changes to the business environment. “Both we and our clients are under pressure on costs, regulation and disruption around data technology,” said BNP Paribas Securities Services managing director Robert van Kerkhoff. According to senior vice-president Eduardo Gramuglia, the pandemic has accelerated strategic changes at State Street Bank International to adapt to new cost imperatives and the evolution of asset classes and products.









Tailor-made offerings





Asset managers, meanwhile, must take into account increasingly differentiated customer needs. Micaela Forelli, head of European distribution at M&G International Investments, says demand can no longer be served by a single fund or range but an ad hoc and niche approach. Amundi business development manager Etienne Lombard added: “Ultra-high net worth individuals with whom you have to listen to their needs – it’s no longer prêt-a-porter but haute couture.”

Independent consultant Peter Grimmett says that in some areas, policymakers need to do a better job. “The industry was very supportive of the European Long Term Investment Fund regime, but what came out was slightly different,” he said. “ELTIFs were to offer regulation and access to retail clients, but the retail rules were tough – so it was easier for asset managers to launch AIFs instead. The basic Pan-European Personal Pension product came with a 1% maximum charge including advice fees, which was very difficult for active asset managers. Changes are needed to make these regimes fit for purpose.”

These developments are taking place just as economic policy fundamentals are undergoing their biggest change in three decades, according to Citi chief economist Arnaud Marès. “The 30-year separation of monetary and fiscal policy is probably over,” he told conference participants. “Economies will continue to need huge government support until a Covid-19 vaccine is rolled out.”

Meanwhile, monetary policy is no longer working as it’s supposed to, he says; even with interest rates at zero, or negative rates, people are convinced they need to save rather than spend. “In addition, governments that have borrowed hundreds of billions of euros need to know that central bank support will not be suddenly taken away. In this new world, central banks have no choice but to ensure interest rates and yields will remain close to zero for a very long time.”










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EIB’s Hakan Lucius: “Agreeing on a common language about sustainable finance is key”

Headshot of sustainable finance expert Dr. Hakan Lucius, European Investment Bank's Head of Corporate Responsibility

Long before sustainability and sustainable finance were on, well, everyone’s minds, Hakan Lucius was pounding the drum for the world to pay attention.

Over his two decades in the field – and now in his current role as Head of Corporate Responsibility at the European Investment Bank (a new client of VitalBriefing’s services in Sustainable Finance), Dr. Lucius has amassed a stellar background as a leading authority in the field, structuring billions in investments, loans and equity for multinational teams negotiating sustainable initiatives with governments, businesses and civic organisations.

In this interview with VitalBriefing CEO David Schrieberg, he discusses the EIB’s role as a global sustainability leader and the challenges in a field that is catching fire at a time the world never needed it more.






What are the key criteria for distinguishing between genuine ESG, green or sustainable financial instruments or products and those whose promoters are seeking to jump on the bandwagon?




It is important to look behind the headlines, into the actual activities, standards and appraisal processes. The European Investment Bank (EIB) is the world’s largest multilateral lender.  Ensuring that sustainability is embedded in all our work means three things:

  1. A number of activities are excluded from EIB lending because they are incompatible with our sustainability objectives.
  2. All projects and investments have to comply with the EIB’s Environmental and Social Principles and Standards to incorporate environmental and social sustainability considerations into our investments.
  3. We perform a separate economic appraisal to assess the cost and benefits of our investment projects to society.

While embedding sustainability into our processes, we are also one of the biggest providers of climate finance. 

We have been Europe’s climate bank for a long time. 2015 was a milestone year in this field, when the EIB Climate Strategy was launched and EIB Climate Action finance had reached a record high of EUR 20.7 billion, representing 27% of overall EIB financing.

Now the EIB has decided to make a quantum leap in its ambition, becoming the EU climate bank. We will stop financing energy projects reliant on fossil fuels and we will increase our ambitions in climate action and environmental sustainability.

Our approach builds on three pillars: The first is to increase our own financing; we are aiming at 50% for climate and environmental sustainability by 2025.

The second pillar is a commitment to support €1 trillion of investment for climate action and environmental sustainability by working with our public and private partners in the decade to 2030.

The third pillar is to align all our activities with the principles and goals of the Paris Agreement starting by the end of this year.

This new ambition will help unlock the massive investments that will be needed for the decarbonisation of our economies. In this regard, the EIB is a central piece in the implementation of the European Green Deal to make Europe the first carbon-neutral continent by 2050.

— — —









How big a problem do you believe greenwashing really is, as opposed to honest confusion or differences between conflicting sets of sustainability criteria?




We put sustainability at the heart of what we do. The ultimate goal of projects and investments financed by the EIB Group is to improve people’s lives by promoting sustainable and inclusive growth within the European Union and beyond. We focus on four priorities areas: innovation and skills, access to finance for smaller businesses, infrastructure and climate and environment.

Being a policy-driven Bank, the EIB appraises and monitors all the projects it finances with regard to their sustainability credentials. We only finance projects that pass our financial and sustainability due diligence.

Appraisal and monitoring ensure that projects comply with the stringent EIB Environmental and Social Standards based on the EU legal framework. In addition, we also measure and publish the carbon footprint of all projects with a significant impact.

On the borrowing side, sustainability plays a major role in our fundraising activities.Two debt products stand out for their very specific sustainability criteria: Climate Awareness Bonds (CABs) and Sustainability Awareness Bonds (SABs).

While CAB proceeds are allocated to projects contributing to climate change mitigation, proceeds from SABs are allocated to projects contributing to environmental and social sustainability objectives beyond climate.

We are subject to an external assurance and we have a methodology which is harmonised with all the multilateral development banks on what can be called green. We report on the allocation of proceeds, transparently listing amounts disbursed to individual investments.

Transparency is key.

— — —









What kind of activities are ‘beyond the pale’ in terms of sustainability? What about fossil fuel energy producers or other carbon emitters investing to reduce their carbon footprint? How should one draw the line?




Firstly, I would like to highlight that we have a new Energy Lending Policy and we are stopping all financing for unabated fossil fuel projects. This means in the energy sector, lending for energy efficiency projects, renewable energy projects and for power distribution and interconnection.

A second aspect is the assessment of our projects. Our sustainability due diligence demonstrates how we ensure sustainability in carrying out our financing.

We support projects in sectors that make a significant contribution to growth, employment, regional cohesion and environmental sustainability in Europe and beyond.

The EIB can only support projects that (a) are eligible, (b) fulfil financial criteria, and (c) meet our separate sustainability due diligence.

— — —









Does the sustainable and responsible investment sector suffer from a lack of universally-recognised criteria and standards? Will the EU’s sustainable finance package fill the gap?




Agreeing on a common language about sustainable finance is key. The EU is taking the lead on defining the term, as well as the subsequent actions.

The EIB Group contributed to the EU Action Plan on Sustainable Finance, it helped develop an EU taxonomy for climate action and other environmentally sustainable economic activities.  It will provide specific technical screening criteria and determine which economic activities can qualify for each environmental objective.

Our contribution to the EU Taxonomy also includes the establishment of an EU Green Bond Standard. This technical work can bring about a significant increase of climate finance.

— — —









Do you believe that refinancing of existing projects or programmes through instruments designated as green or sustainable meets the spirit as well as the letter of ESG investment?




The EIB finances only new projects and does not refinance. We provide funding and expertise for sound, sustainable investment projects in support of EU policy objectives.

We focus on four priority goals: innovation, environment, infrastructure and SMEs with two cross-cutting goals: climate action and cohesion. We support projects that make a significant contribution to growth, employment, regional cohesion and environmental sustainability.

The EIB cannot do it alone, we need private investments. The EIB’s fundamental role is to attract private investors to the projects it finances. This is why current work to make the financial system greener is so important and we are contributing to current initiatives to make this happen.

— — —









How does the EIB strike a balance between the goal to promote sustainability worldwide and the pressing financial and investment needs of loan recipient countries, for example in the exploitation of natural resources or employment/working conditions?




The EIB was created to support economic and social cohesion in Europe. We dedicate at least 30% of our financing in the EU to increase cohesion and this will also support the transition to a sustainable economy.

In the current situation, the EIB is finding solutions for COVID-19, but we should not reduce our commitment toward climate and environmental issues. It is important that one sustainability goal is not pursued at the expense of other goals.

Public financing institutions like the EIB must play a leading role in that regard, facilitating the flow of private capital into sustainable investments at the needed scale globally by supporting the creation of the necessary enabling environment and partnering with the private sector.

— — —










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Don’t miss LuxFLAG’s Sustainable Investment Week 2020

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As sustainable finance catches fire around the world, propelled in part by the social and economic needs created by the global Covid-19 pandemic — and as a central pillar, of VitalBriefing’s economic coverage — we are proud to be media sponsors of the upcoming LuxFLAG Sustainable Investment Week 2020, a follow-up to its successful debut conference last year.

Over five days, starting on October 12, distinguished speakers who are immersed and versed in the issues will present 21 digital events covering, among other topics, Climate Finance, ESG (Environment/Social/Governance), Impact Investing and Sustainable Development Goals — all topics that are central to our own work at VitalBriefing.

Unlike most other Luxembourg-based conferences, this one is free not only for professionals in the financial industry – who will hear experts discuss issues ranging from portfolio decarbonisation and preparing sustainable finance action plans for investment funds to measuring the impacts of social investments and understanding relevant European regulation – but also the general public.

LuxFLAG was founded in 2006 by seven public and private founding partners and whose charter members include VitalBriefing clients such as Luxembourg for Finance, the European Investment Bank, ALFI and the Luxembourg Ministry of the Environment, Climate and Sustainable Development. It has steadily grown in influence, recently granting 100 funds the right to use its label, raising the total of such investment products to 303, representing €128 billion in assets under management – and extending its reach to Denmark, Finland and Spain, in addition to Belgium, France, Germany, Italy, Ireland, the Netherlands and the Grand Duchy.

LuxFLAG awards its label to eligible investment vehicles in Climate Finance, ESG, Environment, Microfinance and Green bonds. The label must be renewed after one year, ensuring that the products maintain their validity as sustainability vehicles.

Don’t miss out! For more information and to register for the LuxFLAG Sustainable Investment Week 2020 conference, click here.

This Is Why We Need High-Quality News Sources

ball of generic newspapers with the word NEWS visible

Take a quick scan of online news and you might conclude that the internet has played an important role in democratising the spread of information.

Makes sense. There appear to be more news providers than ever, liberated by the near-zero cost of digital publishing.

No longer is the flow of news restricted by the time, trouble and, above all, cost of printing and distributing news content to readers.

Instead, the process of publishing news is reduced mainly to its essentials: gathering, selecting and collating.

Certainly the proliferation of information sources complicates our task at VitalBriefing of searching, curating and summarising relevant news to distribute to our clients. The volume of online information relating to a particular topic or issue has exploded massively in recent decades. As such, it significantly increases the importance of our role in assessing and selecting the sources we use to find the news our clients need.

Yet, what we’ve found is that even as the number of news sources rises each year — and in a multitude of languages — the proportion of those that are high-quality and reliable is diminishing. And not only as a proportion of the overall information flow, but in absolute terms.

In short, as quantity is swelling, quality is waning.

Shrinking pool of experience

There’s no secret behind this. Gathering news in a serious way is an expensive business. Across Europe and other parts of the world, the number of news organisations with the resources to provide comprehensive coverage of current affairs at a national and international level is shrinking.

The erosion of newspapers’ advertising base (not to mention those of TV and radio stations) by competition from internet platforms has undermined their ability to employ journalists and editors of the highest quality.

Experience is a particularly expensive quality, and many news organisations find they cannot afford much, if any, or at least not as much as in the past. And many news businesses have struggled to really understand the internet, its business models, audience behaviour — and to compete successfully for revenues there.

An aspect of the shrinking of breadth and depth in the news business long predates the internet. Until some 20 years ago, many newspapers employed teams of foreign correspondents, bringing their readers first-hand accounts of international news.

Starting in the 1970s and accelerating, however, their numbers have steadily been shrinking as media instead turn to news agencies such as Reuters, the Associated Press, dpa and Agence France-Presse.

The wire services strive to provide a good service but they are not immune to budgetary headwinds. This has an impact on the number, experience and expertise of the journalists they employ, and even more the editors who act as gatekeepers of the quality of their work.

Over the past couple of decades, I have seen numerous examples of how these constraints are eroding quality and accuracy.

When information matters

It doesn’t help that news information as a commodity is significantly less valuable than financial data — which is important, but to large segments of the public, even among decision-makers in business and politics, often means little without expert and cogent analysis.

Not that financial and business news are exempt from the overall trend toward erosion of expertise and quality. Quite the contrary: Many more lucrative activities can be performed with a sound knowledge of finance, economics and business than to write about it.

That shows in the output. The result is a diminishing pool of capability and understanding in areas in which it matters greatly.

I see too many young journalists trying to deal with complex topics for which they lack sufficient grounding. I should know — I was one of them. But I was fortunate to benefit from the guidance of mentors and editors who taught me over the years. I fear there are far fewer such influences around today. As noted, they’re expensive.

And the quality of coverage is all the poorer for it.

Original content and press releases

In the absence of sufficient journalistic expertise to create valuable original content, the void is filled by official information and press releases.

True, thanks to Google and its peers it’s so much easier today to seek out information online than by making phone calls or, perish the thought, visiting libraries. But scraping data from companies’ websites is no substitute for critical analysis and asking difficult questions.

The notion of press releases takes us full circle to the issue of the proliferation of what appear to be online news sources. A substantial proportion of the information found online is simply that — recycled press releases begging for clicks that bring revenue from advertisers.

Yes, it’s information of a sort. But journalism it isn’t.

So you’re thrown back to a diminishing circle of news organisations that still remain dedicated to reporting and analysis that enhances the knowledge and understanding of its audience. In many cases they support themselves through subscription plans that inevitably restrict the availability of that high-quality information.

Some, bravely, are trying to avoid this fate. I’m thinking of outlets such as the left-of-centre UK newspaper The Guardian, which asks readers to donate what they can, or The Washington Post, that found a high-rolling saviour in the form of Jeff Bezos.

Why quality matters

If you ever doubt the value of high-quality news sources, consider the more than five years spent by the Financial Times (full disclosure: I have worked for the FT from time to time over many years) investigating the credibility of the financial statements of Germany’s fintech stock market darling of the 2010s, payment processor Wirecard.

For years, the newspaper’s journalists kept nagging away at inconsistencies and discrepancies in Wirecard’s accounts that pretty much wholly escaped the company’s regulators. Wirecard dismissed the FT’s reporting as lies encouraged by the company’s rivals and short-sellers — right up until June 18 this year, when it acknowledged that €1.9 billion on its balance sheet was non-existent and it collapsed into bankruptcy.

As an illustration of what makes high-quality news sources valuable amid so much online noise, it’s hard to improve on that.

Private Equity In The Covid-19 World: Hero Or Villain?

Covid-19 impacts economies across the globe

The private equity industry has long struggled to overcome a public reputation for maximising profit and jeopardising healthy businesses by loading them with unsupportable debt and charges. In light of the new world we live in, can the sector restore its image by helping to relaunch economies after the Covid-19 pandemic?

Over the past two decades the private equity sector has evolved from a marginal and mostly obscure corner of the investment industry into a core element of the financial system.

Now the Covid-19 pandemic and its aftermath poses unique challenges for private equity firms and their investors living in a world where company valuations are fluid and volatile, creditworthiness is cloudy and governments seem set to play a far more prominent role in economic management than at any time this century.

In terms of financial heft, private equity should be well placed for a leading more in economic recovery. Worldwide, the industry is flush with cash — or at least commitments.

Private equity funds have a record $2.5 trillion available in ‘dry powder,’ money pledged by investors that firms have not yet drawn down.

The environment promises to be welcoming for firms with money to spend, especially those specialising in distressed debt, of which there is plenty expected to emerge over the coming months and years, or those seeking to build industry-leading portfolio companies through bolt-on acquisitions that add scale.

Alternative to turbulent public markets

True, the market environment for private equity investment was looking less favourable before the pandemic emerged and lockdowns began. The huge pile of dry powder reflects in part an increasing shortage of suitable investment targets, which had been pushing up prices.

But private equity, along with other types of more complex and longer-term investment, looks more attractive to institutional investors than turbulent public equity markets, cash earning next to nothing in interest and bond markets yoked to the imperatives of central bank monetary easing strategies.

Not to mention the clouds gathering over that staple of institutional investment portfolios, commercial real estate.

However, private equity has its own hurdles to overcome to position itself as a saviour of struggling companies and stuttering economies.

First and foremost? A wretched public image, fuelled by both misunderstanding of what private equity is and does and by the industry’s frequent tone-deafness to wider concerns of society.

Private equity’s opaqueness, complexity and lack of public accountability is often placed in contrast with the (supposed) transparency of companies listed on public markets.

Critics such as Sheila Smith, a former senior economist at the UN Development Programme, describes the sector as “termite capitalism”, targeting a business model characterised by reliance on borrowed money rather than investors’ capital, asset stripping and job destruction, opaque fee structures, unsustainable extraction of returns through dividends funds by further borrowing and use of debt and offshore structures to reduce, often to zero, tax liabilities in the companies in which portfolio companies operate.

Investing for the long term?

In vain do private equity companies protest that their business involves not wanton extraction of assets but the creation of value through the restructuring and re-energising of struggling, directionless companies, the empowering of capable managers and the incentivisation of employees, and that they focus on companies’ long-term development, not just the next quarter’s bottom line.

Because it’s such an emotive phrase, they don’t like to speak of ‘creative destruction.’

But that’s a key driver of the private equity model: stripping away dead-end jobs and businesses and replacing them with new ones that are more productive and have a long-term future.

Some of the criticism is certainly unfair. The obsession with the offshore tax haven structures of private equity (and other alternative investment firms) tends to ignore the key classes of institutional investor that are non-taxpayers, such as university endowments and charitable organisations.

Rather than a pure creature of plutocratic vampire capitalists, the private equity industry is driven principally by the needs of their investors: pension funds to meet their commitments to retirees and insurance companies to meet policy-holder claims.

It’s against this unfavourable reputational backdrop that the private equity sector must face the challenges of the post-pandemic world.

What will it look like?

Swings and roundabouts

In the short to medium term, the industry is suffering similar hits to revenue and profit as other businesses. Antoine Drean, founder of private equity placement agency Palico and consultancy Triago, expects profit-sharing – carried interest – on above-benchmark returns to dry up, especially for firms with heavy exposure to the most vulnerable areas of the economy, such as the hospitality, travel and energy sectors.

Hugh MacArthur, Graham Elton and Brenda Rainey of consultancy Bain & Company argue that dealmaking is set for a slump while firms focus on the health of existing portfolio companies and bank lending to the sector is likely to be significantly constrained and subject to significantly tighter conditions (although this is likely to be offset by the sheer volume of dry powder and likely lower valuations of acquisition targets).

They say private lenders, a significant force in the market since the global financial crisis, should also help fill the gap while the need to exit mature portfolio companies in order to provide returns to investors will also spur deal flow.

The Bain & Co. partners also warn that some investors may find themselves financially squeezed if calls on existing capital commitments exceed private equity distributions.

This points to a reduction in fundraising, at least temporarily, after a decade of soaring inflows from investors looking to private equity’s historically higher levels of return to offset the impact of interest rates at rock-bottom or worse.

While the industry’s overall levels of return are likely to take a quick hit from lower valuations on existing investments, especially those made near the peak of the market, the recessionary environment should yield more profitable opportunities.

Private equity and Covid-19: Core role in institutional portfolios

Can we expect a better reputation for private equity in the months and years after Covid-19? There’s no guarantee that public perceptions will change radically in the near future.

Since the onset of the pandemic, the sector has drawn fire from politicians and others over the insolvency of venerable names of American retailing such as Neiman Marcus and J. Crew, although the critics tend to ignore that the businesses have been deteriorating for years in the face of changing consumer habits and growing internet competition.

However, with near-zero interest rates apparently locked in for years to come, barring an upsurge in inflation that stubbornly refused to materialise despite a decade of loose monetary policy, the core position of private equity in institutional asset portfolios seems more likely to strengthen than to diminish.

In a world where job preservation is now a central economic policy objective, private equity firms will also be under pressure to avoid wholesale layoffs and business closures.

They and their investors likely will have more skin in the game as the peaks of bank leverage of recent years recede and the days of egregious debt-driven dividend recapitalisations are probably mostly over for the foreseeable future. If private equity can claim to be playing a role in saving viable companies and jobs, it may become less of a bogeyman for critics of capitalism.

But it shouldn’t count on being better loved.







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From the 2008 Financial Crisis to Coronavirus Recession: Are the Banks Safe This Time?

It took massive public-sector bailouts financed by unprecedented levels of borrowing to reverse the global financial crisis of 2008-09 brought on by rash lending and investment policies of banks in the United States and elsewhere. With the world on the brink of a coronavirus-triggered recession, how is it different this time?

“In 2008, the banks were to blame for the crisis, but the real economy was not in crisis,” CSSF CEO Claude Marx observed recently. “Now we are in the reverse situation, where a health crisis is causing an economic crisis, and…the banks are part of the solution.”

In fact, the abrupt cutback of bank lending in 2008 and 2009 contributed to the plummet of most countries’ economies into recession.

However, Marx notes, the confidence enjoyed by the banking sector is a critical aspect of governments’ response to the current coronavirus pandemic. One reason: new rules designed to ensure that institutions are substantially better capitalised than 12 years ago, as well as guarantee schemes expanded to protect retail deposits.





Imprudent parents

Increased transparency affecting both regulators and investors, as well as tools such as stress tests, have been established to prevent both a ‘business-as-usual’ mentality and disregard of the lessons of the century’s first decade.

In the grand duchy in particular, cautious business practices are a well-engrained habit already. For that, we can credit the two Luxembourg institutions that required state rescue: Dexia BIL and Fortis Banque Luxembourg, both brought down by the imprudence of their parents abroad.

For the most part, privately-owned commercial banks have played the key role in channelling government funding into loans and guarantees to preserve businesses and jobs.

But Marx acknowledges that the risk of a recession brought on by the coronavirus cannot be ruled out altogether.

If the economic shutdown prompts widespread bankruptcies and defaults on the share of government-backed loans where the risk is retained by commercial institutions, as well as on previous lending, we may be headed again for trouble.

Because of the banks’ capital strength, and in several cases deep-pocketed shareholders, the risk of a coronavirus-based recession affecting Luxembourg is lower than in most other countries.

But policymakers worldwide must consider seriously the risk as the confidence of a rapid rebound that was widespread just months ago — remember the famous V-shaped recession and recovery? — has begun to fade.

Today, economists are illustrating the recovery with hockey stick charts more like Nike’s trademark swoosh logo.





Risk of losses

Federal Reserve chairman Jerome Powell has argued that US economic activity could contract temporarily by as much as 30% and that a full-scale recovery may be delayed until the end of 2021. He says it depends on people regaining confidence that their risk of illness is low, which in turn may rest on the widespread availability of a Covid-19 vaccine.

He expects unemployment to continue to climb for at least another couple of months before a rebound begins in the second half of this year.

Already, the Fed has warned in its semi-annual report on financial stability that US banks are at risk of material losses that could strain even their post-financial crisis capital and liquidity buffers, as well as the billions of dollars they have set aside in provisions for potential non-performing loans.

Any renewal of volatility in financial markets could create additional financial stress if asset prices fall, it adds.

There is also concern in France’s banking sector about the longer-term implications of the government’s credit guarantees. Industry members warn that a significant number of companies taking government-backed loans could be heading for a debt crunch over the next next years — perhaps as early as this summer — given that their profitability is likely to remain depressed for some lime.

Encouraged by the European Central Bank’s ultra-low interest rates, companies have been loading up on debt in the form of bank loans and bond issues for years.

“The risk is that by putting French companies that were already not in good health on life support, we could be adding a financial crisis to today’s consumption crisis, perhaps in a year, when companies are no longer able to refinance themselves and banks may be closing the credit taps,” worries Pierre-Arnoux Mayoly, a partner with law firm McDermott Will & Emery.

Apart from general concern about businesses, especially small ones, and households whose financial equilibrium may have been eroded by loss of income since March, policymakers are closely examining companies in particularly vulnerable sectors, along with those that were already heavily indebted before the pandemic took hold.

Potential problem areas that were already causing concern before the pandemic include highly-leveraged hedge funds disproportionately affected by market volatility and asset price declines.

They also may have contributed to the turbulence by having to sell assets to meet margin calls or reduce portfolio risk. A year ago 14% of US hedge funds accounted for half the industry’s net borrowing.





Leveraged but not covenanted

Red flags are also waving over so-called leveraged loans — lending to companies that were already highly indebted, typically with debt exceeding five times their earnings before interest, tax, depreciation and amortisation (ebitda).

These include a significant number of private-equity-owned companies burdened with debt from their acquisition cost or from special dividends paid to investors — paid not out of profit but additional borrowing.

Analysts say the two high-profile, private equity-owned US retailers, J. Crew and Neiman Marcus, that have filed for bankruptcy over the last two months were crippled by debt burdens — $1.7 billion and nearly $5 billion respectively — that prevented them investing to meet the challenge of e-commerce and new shopping habits.

The sector’s problems aren’t purely coronavirus-recession-related. Indeed, they have been worsened by the steady erosion over the past seven years of loan conditions imposed by banks, especially for leveraged loans and private equity-backed companies.

This trend has developed over the past decade amid rock-bottom interest rates that prompted lenders to compete for the business of more lucrative but riskier borrowers.

According to Moody’s, syndicated leveraged loan covenant quality set a decade-long low in the fourth quarter of 2019, with the majority of credit agreements permitting, for example, collateral-stripping asset transfers, the retention by owners of excess cash flow of the proceeds of asset sales, and substantial ebitda adjustments.





Easing capital rules to avoid a coronavirus downturn

Meanwhile, central banks and regulators have been accommodating with banks in the interests of keeping loans flowing into the economy, allowing institutions to draw on capital buffers introduced since the global financial crisis and to delay for a year compliance with new Basel III capital standards, measures designed to prevent a repeat of the banking sector’s problems in 2007-09.

The European Parliament is considering legislation that would ease stricter bank leverage ratio requirements due to take effect next year.

In addition to a one-year delay, the European Banking Federation also is backing an existing measure that would allow national regulators to exclude deposits held at the European Central Bank from their balance sheet total for the purposes of calculating the ratio.

Some governments want to go further. France’s finance ministry says the government-guaranteed loans issued by banks should receive the same treatment. There are even calls for the state debt on banks’ books to be excluded from leverage ratio calculations, a measure already temporarily in place in the US.

So while the banking industry may be confident right now that this time it is not the problem but the solution, a little caution is appropriate — the potential of a coronavirus recession is very real.

Neither the Covid-19 pandemic nor its economic consequences are close to being fully played out, and not even the most prescient expert can predict with assurance where all the chips are going to fall — or when.






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Europe uses sustainable finance initiative to curb climate change

Europe is using its Sustainable Finance Initiative to fight climate change. But will it work? VitalBriefing Editor-in-Chief Simon Gray shares his expert insights on the matter.

With much fanfare, the new European Commission president, Ursula von der Leyen, has unveiled the continent’s “man on the Moon moment”: Europe’s Green Deal plan to to achieve carbon neutrality by 2050.

True, details of just how the EU plans to meet this challenging target will be revealed only in June. And Poland, where 80% of the electricity comes from coal, is holding back on committing to carbon neutrality until the EU earmarks more financial assistance to ease its transition.

Crucially, though, as the Trump administration sneers publicly at climate science, the EU is now formally on board for taking a global lead.

The Commission declared that to become the world’s first climate-neutral continent is “the greatest challenge and opportunity of our times”.

Its plan, announced in mid-December, includes investment in green technology, sustainable solutions and the creation of new businesses, acting as a catalyst for economic growth through a transition that’s “just and socially fair …[and] designed … to leave no individual or region behind”.

Immediate impact

Arguably, though, a less high-profile decision earlier that month may have a more immediate impact on carbon emissions and the environment.

On December 5, EU finance ministers and representatives of the European Parliament reached agreement in principle on the “taxonomy” of the Commission’s sustainable finance initiative: a common set of rules governing how to determine which activities can and cannot be counted as green investments.

The finance ministers’ accord still must be formally endorsed by EU leaders. But the road now appears clear for the full sustainable finance package to become EU law – and it could start influencing corporate behaviour in Europe and beyond well before the European Green Deal takes effect.

The Commission’s initiative features three elements, two of which were endorsed last year by the European Parliament and member states.

The first would require institutional investors and asset managers to reveal how they integrate — or fail to integrate — environmental, social and governance criteria into their risk management processes.

Green benchmarks

A second measure would amend the EU Benchmark Regulation by creating  a new category of standards comprising low-carbon and positive carbon impact measures to provide investors with better information on the carbon footprint of their investments.

The Commission also has proposed changes to subsidiary legislation to MiFID II and the Insurance Distribution Directive that would incorporate ESG criteria into the advice that investment firms and insurance distributors must offer individual clients.

But taxonomy has always been the most critical element. The biggest issue in sustainable or green finance is how exactly it’s defined. Critics argue credibly that the lack of standard definitions has led to an epidemic of ‘greenwashing’ – investment firms and other businesses spouting green principles without adopting meaningful changes to their energy use, carbon emission or waste practices.

Universal classification

The proposed taxonomy regulation would set the conditions and framework for a unified classification system that defines an environmentally-sustainable economic activity.

But it hasn’t been without dispute and controversy — which explains the delay in approval from EU member states.

Most notably, France sought to have nuclear power deemed a low-carbon source of energy. But Paris appears to have admitted defeat in the face of vehement opposition from Austria, Germany, Luxembourg and the European Parliament.

However, the finance ministers agreed to a “do no harm” provision expected to exclude nuclear power when detailed rules are drafted.

The deal would create three categories for sustainable investments: “green”, “enabling” and “transition”, obliging companies with more than 500 employees to reveal the extent to which their activities fit these categories.

Cost of capital

How will all this affect businesses? By intensifying pressure on fund managers and institutional investors such as insurance companies and pension funds to focus their investments on companies that meet the Commission’s criteria — and to withhold their money from businesses that can’t or won’t do so.

So, expect the cost of capital for fossil fuel-oriented companies to rise, affecting their profitably and undermining their ability to compete with rivals that embrace renewable energy.

Yes, there’s already plenty of activity in the green investment sphere. But the lack of common standards has proved a major drawback. With the possibility that EU standards become widely adopted around the world, the Commission’s taxonomy could become the gold standard that, at last, vaults the green economy to global acceptance.


















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How the EU’s green finance ambitions could revolutionise fund management

The European Commission will soon launch ambitious plans that would position the EU as a global leader in the reduction of carbon emissions and the transition to a more sustainable economy that can contribute to curbing climate change. On behalf of our client, KNEIP, VitalBriefing looks at how Europe’s green finance goals could be a gamechanger for the fund management industry.

Click here to read How the EU’s green finance ambitions could revolutionise fund management.