Being green is not necessarily less risky

"The new sustainable finance strategy comes with light and shadow. On the bright side, it is a useful and pragmatic step to make the classification of green investments more geared towards transitional activities. It is also right to strengthen the international dimension of sustainable finance as globally agreed standards will make sustainable finance significantly more attractive for possible investors", said Markus Ferber MEP, EPP Group Spokesman on Economic Affairs, in connection with today’s proposals on sustainable finance and green bonds from the European Commission.

"However, it is not bright to further mix sustainability aspects into prudential regulation. It is a risky endeavour. Something cannot be considered less risky merely because it is labelled as ‘sustainable’. Being green can be financially risky. We would undo a lot of the progress made since the last financial crisis if we were to leave the path of risk-based financial services regulation", Ferber said.

The Commission has also come forward with a proposal on an EU Green Bond Standard. “There is a plethora of different sustainability standards out there and there would be value in converging into a single standard. The challenge for the Commission’s proposal is to prove that it is a useful tool for corporates and sovereigns alike. If not, it will only become yet another standard among many. In this sense, the adoption of the EU Green Bond Standard will also be a litmus test for the usefulness of the new classification of green investment (taxonomy). The fact that the Commission will use the standard form International Capital Market Association (ICMA) for its own green bonds under the recovery fund does not look like a vote of confidence for the EU Green Bond Standard.”