Co-operative banks have called on European leaders to strengthen their efforts in the fight against climate change.
Co-operative banks are already engaged in sustainable finance and committed to the Paris Agreement, the declaration adds.
While stressing that they are ready to take their share of responsibility for the energy transition, co-operative banks add that this transition is “a societal issue involving a multitude of players”.
The declaration also points out that local and regional banks can play an important role in driving change by granting funding for energy efficiency, installation of solar panels, biomass power or households saving products linked to sustainability. However, the sector adds that this can only be achieved within an environment that allows local and regional banks to thrive.
At their meeting in Paris, EACB members set out a series of priorities to move forward the EU agenda, such as finalising the regulation on taxonomy as the “cornerstone” of all other sustainable finance initiatives.
In May 2018, the European Commission presented a package of measures as a follow-up to its action plan on financing sustainable growth. The initiatives included establishing a unified EU classification system of sustainable economic activities (taxonomy) and improving disclosure requirements on how institutional investors integrate environmental, social and governance (ESG) factors in their risk processes.
But the sector warns that European taxonomy should not place EU banks at a disadvantage when compared with other initiatives at a global level.
In this respect, co-operative banks also suggest a classification system with a degree of flexibility to enable a transition, rather than only focusing on the “greenest activities”.
The declaration argues that banks should not be penalised for continuing to finance ordinary businesses – focusing not only on incentivising capital flows to sustainable initiatives, but also on financing the transition.
Disclosure requirements should take into account proportionality, it adds, and banks should be given access to information collected by governments and central banks on how companies or countries rated in terms of sustainability.
The EACB has already endorsed the UN’s new Principles for Responsible Banking, which will be formally launched in September. The EACB says the reporting requirements under these principles should be proportionate, especially in the early stages after their adoption, reflecting the size and complexity of the balance sheet of the reporting bank.
EACB general manager Hervé Guider said: “Finance is an important tool to reach sustainable development goals, since the transformation of our current economy requires huge investments. Measures related to sustainable finance should create incentives for the transition to a sustainable economy and not new regulatory constraints. Considering the structure of the EU economy based on banks financing, co-operative banks underline the key role that they can play in making the energy transition possible at local level.
“Key ‘decentralised’ activities – such as mortgages for energy efficiency, installation of solar panels, biomass power or households saving products linked to sustainability – can only be achieved via the mobilisation of and a favourable regime for local and regional banks. But if co-operative banks are ready to take their share of responsibility for the energy transition, they stress that this energy transition is a societal issue involving a multitude of players. The difficulties in achieving the objectives of COP21 must be addressed within a broader framework than just the banking sector.”