The European Association of Co-operative Banks (EACB) has called on the European Commission to facilitate the role of the sector in sustainable finance by setting favourable regulatory frameworks.
In a meeting hosted by MEP Sirpa Pietikäinen at the European Parliament, the EACB presented its latest policy paper, which includes suggestions on possible regulatory and supervisory changes and incentives.
Co-operative banks across Europe have 58,000 outlets and 209m clients, and the paper highlights their role in sustainable financing. They provide:
- sustainable investments and savings products
- energy transition project financing,
- green financing to SMEs
- finance for energy efficiency in private and public buildings
- and, through their social mission, reinvest significant portions of profits in the community.
The EACB warns that the complexity and continuous motion of the regulatory framework has an adverse effect on local co-op banks, and could lead to a less diverse banking environment.
To address this, the ECB supports the development a standard taxonomy for sustainable assets, and the promotion of a low-carbon market for retail banking activity with adapted commercial tools.
It also wants a stable legislative and regulatory framework, especially for key parameters such as environmental policy, taxation and prudential requirements.
And it calls for a legal framework conducive to a diverse range of business models of financial institutions, to create an ecosystem which sustains different needs and longer-term approaches.
“Acting in favour of sustainable financing is in the very nature of co-operative banks whose mission is to accompany members and clients, as well as their communities, in the long term,” said Etienne Pflimlin, chair of the EACB Task Force on Sustainable Finance. “Households, local communities and local entrepreneurs are mobilising in favour of climate. Co-operative banks are on their side.
“However, the European Commission’s and the international initiatives are often too focused on the capital and asset management side. We believe that a greater emphasis shall be put on the retail side of sustainable financing by providing a series of tools and policies that are conducive of green growth in the regions via SMEs, households and local actors.
“Co-operative banks shall be closely involved.”
Sirpa Pietikäinen, MEP, rapporteur for the circular economy and former Finnish minister of environment, agreed that sustainable finance initiatives were crucial for the long-term growth and competitiveness of the EU.
“Resource scarcity and environmental risks should be incorporated in financial legislation inter alia concerning credit ratings, capital requirements, insurances, financial product information, accounting and auditing,” she said. “Capital markets can also be reoriented towards long-term sustainability through the integration of environmental factors.
“These are aspects that I look forward to emphasising as the Parliament, beginning with the ECON Committee, starts its deliberations on the Capital Requirements Directive. Co-operative banks, with their local focus, play an important role in this and we must preserve it, for example with proportionality. I look forward to continuing this discussion with EACB.”