STATEMENT | FINANCIAL POLICY | SUSTAINABLE FINANCE
Rethinking Sustainability How less could be a whole lot more
6 January 2025 Key Messages ▪
All of us – individuals, companies, the financial sector and policymakers, need help make the green transformation happen. The contribution of the financial industry should be limited to the adequate consideration of climate and environmental risks, and the provision of sufficient financial and insurance services.
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Policymakers need to adopt a new approach. The effectiveness of steering capital flows through the financial sector is too low and too cost-intensive with complex and comprehensive stipulations. The transition to a green economy should emanate more from the real economy, supported by intelligent economic, environmental and climate policy and by placing more faith in companies once again.
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Regulatory instruments should be highly efficient and the ensuing costs minimised. They should be helpful rather than obstructive. Sustainability regulation does not meet these criteria and urgently needs to be reviewed. This review should involve significantly slimming down the CSRD, making the application of the EU Taxonomy voluntary, interpreting transformation plans as a general orientation, and resolving the challenges of ESG ratings.
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Climate-related topics, long at the top of the regulatory agenda, are increasingly giving way to environmental needs, such as preserving biodiversity. A standardised definition of the metrics involved, comparable to the Greenhouse Gas Protocol, are not yet in place and need to be developed swiftly. The framework here should not repeat the same regulatory errors of the past. It should focus on accuracy, proportionality and practicable approaches for the real economy.