EESC plenary debate with Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union
8 December 2021
Welcome and thank you for being here today! The two of us go back a very long time and it really is a pleasure to see you here discussing with European civil society!
We are only a few weeks from the COP26 in Glasgow and although that Climate Summit did not live up to our hopes and expectations, nonetheless, sustainability is still the buzz word. 'Covid' is the other buzz word, although this one, we would really like to see the back of it. But this is where we are at and if there is one thing that humans are good at, it is 'adapting'.
And crises do change the way we think about our societies and economies. They change the way we think they should be organised, they change our priorities and our financing decisions. And when we look at the scale and scope of the Climate induced disasters of last summer, we really do not have much choice. We must put finance at the service of the EU's transition to a sustainable economy. We must build crisis and resilience funds into our budgets. And I am proud to be a European, with the EU taking the global lead on Climate neutrality.
The real questions for me, are how to bring on board the real economy and citizens in this ambitious strategy of EU sustainable financing and green bonds? And secondly, how are we going to afford it? As we all know, Member States are currently very indebted because of Covid. They are faced with the highest share of debt in relation to GDP, since the aftermath of the Second World War. The IMF estimates that rich economies spent almost 13% of their GDP on direct spending and most governments took the approach of "Pay now and ask questions later".
In this context, I would like to put forward three recommendations:
Firstly, sustainable finance must be approached from a holistic perspective and include both environmental and social objectives. Unfortunately, many of the measures mentioned in the EC Communication on financing the transition to a sustainable economy, put more emphasis on the environmental dimension. However, we are all aware that the green transition must also be inclusive and just. Leaving nobody behind, as EC President so eloquently said. So we need an integrated taxonomy, embracing both environmental and social goals in equal measure. Only then will we have the capacity to deliver an economically, socially and environmentally sustainable EU, in line with the SDGs and Article 3 of the EU Treaty.
Secondly, there is no doubt in my mind that the success of European green bonds standard will be dependent on broad public support. To attain that public support, these bonds and the taxonomy alignment must be transparent, scientifically sound and constantly updated. There must also be a direct role foreseen for European civil society, in the design and implementation of sustainable finance. For example, they must be sufficiently represented in the Platform on Sustainable Finance and the European Financial Reporting Advisory Group.
Thirdly, I very much welcome the objective of the European Commission to make it easier for SMEs to access sustainable finance. This is a crucial element to supporting the real economy. However, there also needs to be more support for alternative banking systems, such as cooperative or public banks. These differ considerably from the corporate model of banking and can reach more diverse stakeholders such as the social economy, consumer organisations, farmers and SMEs.
In conclusion, we need financing and banking systems that better reflect society's current values and which are closer to the real economy and citizens. We need to learn from the lessons of the 2008 financial crisis and accept that spending, must be part of the solution to sustainable recovery.
Thank you for your attention.