Opinion: How Europe and the World Can Build Back Greener
The pandemic has presented the world with unprecedented challenges to our health, our economy and the way we live and work. But the crisis also presents us with an extraordinary opportunity as we start to move toward recovery.
We can build back better — which means we need to build back greener. We must seize the opportunity to craft a sustainable future for our economy.
That’s what the European Green Deal wants to achieve. We want to reach climate neutrality, reverse biodiversity loss and build a clean economy — supported by investment in green jobs, green innovation and green growth. We estimate that we need 350 billion euros of additional investments each year to meet our 2030 climate targets, on the road to our 2050 goal of becoming the first climate-neutral continent.
Public money will go a long way, but private investment will also play a key role in meeting our target. Private investment will drive the development of new technologies, products and services that reduce environmental harm and mitigate the effects of climate change.
Fortunately, Europe’s investors have an appetite for green. They are choosing greener stocks and bonds. They want transparency on green reporting. They want to contribute to our green goals. This is great news.
It validates the European Commission’s sustainable finance agenda. We have taken major steps to build an ecosystem that enables the financial sector to provide finance as we build back greener. We are putting in place tools to increase transparency and to help investors identify sustainable investment opportunities.
Last year, we adopted the EU Taxonomy Regulation to create a common language for investors who want to use their funds to make a substantial positive impact on the climate and the environment.
Last week, the commission published criteria to specify which economic activities make a substantial contribution to our goals of mitigating and adapting to climate change, as foreseen in the Taxonomy Regulation. These criteria will help companies and investors identify green activities based on a common understanding of what needs to be done to meet our climate goals. They will help companies finance their green transitions if they put plans in place to meet these criteria. The criteria will develop over time as our economy becomes more climate-friendly.
We are also increasing transparency in the area of sustainable finance by improving sustainability reporting by companies and financial institutions. The Corporate Sustainability Reporting Directive, which the commission adopted alongside the taxonomy criteria, will update how large and listed companies report what they do on sustainability — from their impact on the environment, to how they treat their employees and their respect for human rights. These steps are important not only for investors but also for citizens and society at large.
We want the EU to be a world-leading green economy with green jobs and green investment. And we want to help the rest of the world become greener too.
Over time, global sustainable finance standards should converge — so investors and companies know what is green, no matter what market they are active in. They need comparable information to make the best choices.
The EU has led the push for sustainability. We co-chair the International Platform on Sustainable Finance, where policymakers discuss the best ways to mobilize private finance toward green goals. The members of the platform represent more than half of global emissions, population and GDP. Alongside this, we are committed to international cooperation in the G20 and the G7.
We need a huge amount of work and investment to rebuild after the pandemic. The magnitude of what needs to be done is daunting. But we can get there if we seize the opportunity to build back greener. Last week the European Commission took some key steps to make this happen.
Our task is more urgent than ever. Climate change is already a reality — and its impact will only get worse unless we act now.
The solutions will not come from companies, financial institutions, NGOs or policymakers alone. They will come from all of us — in the EU and across the world, working toward and investing in a greener future.
Valdis Dombrovskis is executive vice president of the European Commission. Mairead McGuinness is European commissioner for Financial Stability, Financial Services and the Capital Markets Union.
The views and opinions expressed in this opinion section are those of the authors and do not necessarily reflect the editorial positions of Caixin Media.
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