Remarks by Executive Vice-President Dombrovskis at the Conference on implementing the European Green Deal: Financing the Transition - Hoofdinhoud

Ladies and gentlemen,

Two weeks ago, the World Meteorological Organization confirmed last year as the second warmest on record.

That didn't come as a big surprise to many people.

Unfortunately, TV footage of raging bushfires in Australia, melting icebergs in Antarctica, freak weather in general, have become commonplace.

From cyclones to floods, 2019 was a year of record extreme weather events. And this is an ongoing trend. Since the 1980s, each decade has been warmer than the previous one.

As so many have said - most recently at last week's World Economic Forum in Davos - the world has to act urgently, before it really is too late.

In its annual risks report, the WEF now places the climate emergency as the number one issue of concern.

It should concern every one of us.

Determination to tackle climate change is one thing.

The Green Deal i demonstrates that, as we commit to become climate-neutral by 2050.

Another is to back it up financially.

This bold ambition comes with a hefty price tag.

To make the Green Deal a reality, we need a solid funding plan.

Just to meet our 2030 climate and energy targets, we need an extra €260 billion in annual investments.

As we raise our ambition to cut emissions, we will need even more money to fund a long list of projects and activities.

They will all play a part in Europe's green transformation.

Small-scale energy efficiencies, for example - helping people to cut household emissions and reduce their energy bills.

Lowering car emissions and reskilling workers from coal industry regions.

Or building larger scale infrastructure projects, such as clean energy grids and low-carbon transport systems.

That's why we devised the European Green Deal Investment Plan, or Sustainable Europe Investment Plan.

It puts sustainability at the core of how we invest.

It brings together new policy initiatives and existing instruments.

It signals a change of mindset.

It encourages us all - public authorities, companies and investors - to think ‘green' when we invest.

This will give us real financing clout — at least €1 trillion over the next decade — to fund sustainable projects across the EU i. Around half of that will come from the next EU budget, with at least 25% of spending earmarked to support climate action,

We expect this to trigger a further €114 billion in national co-financing for climate and environment projects.

Our investment programme InvestEU will leverage around €279 billion of private and public funds for climate and environment related investments between 2021 and 2030.

Since InvestEU uses an EU budget guarantee to crowd-in other investors, it can help public funds go further and give investment an extra boost.

The guarantee will allow the European Investment Bank and other partners to invest in more and higher-risk sustainable projects. In turn, that will attract private investors.

And, as you heard at length in the last panel, the Just Transition Mechanism will aim to provide at least €100 billion over the EU's next long-term budget.

Beyond the budget, we will also tap into the innovation and modernisation funds in the Emissions Trading Scheme.

As you know, by 2025 the European Investment Bank aims to double its share of sustainable financing to 50%.

However, this will still not be enough. It is also clear that the public purse cannot foot this bill alone. There is no way that stretched public funds can meet all those needs.

So we have to rely on the private sector.

Public finance needs to lead the way, but the private sector needs to provide the scale.

We need it to help attract capital from across the board - equity, loans, project finance - so that we reach our climate-neutral goal, by investing in economic activities that mitigate climate change.

We have made it easier for investors to do this with the new EU classification system, or taxonomy.

Now that we have agreed its core principles, the system needs to enter into effect so that investors can identify which economic activities qualify as sustainable.

Ladies and gentlemen,

Raising investments is vital, of course. But it has to go hand in hand with the right policy and regulatory environment.

This is how we guide investors towards sustainable investment and steer changes in the behaviour of companies and households.

For example, we plan to propose legislation on green public procurement and adjust EU state aid rules in light of the Green Deal.

Later this year, I will present a renewed sustainable finance strategy, which will include a revision of the Non-Financial Reporting Directive.

This will require companies to increase disclosure on their sustainable activities, and give adequate reliable information on sustainability risks and opportunities.

Not every detail can - or should - be fixed in law. There is also a need for clear reporting standards for companies to apply.

So today, I can tell you that the European Commission will support a process to develop European non-financial reporting standards. This is in line with the Council conclusions on the Capital Markets Union at the end of last year.

I will soon invite the European Financial Reporting Advisory Group to begin preparatory work for these standards as quickly as possible.

The many overlapping international reporting standards and set-ups confuse companies and investors.

They also find it expensive.

The EU is well placed to address this situation - and show leadership in building consensus for a set of standards that can be widely accepted.

However, we cannot do this alone.

The best and most widely accepted elements of what exists today will be our starting point.

We will also use expert assistance from those organisations and individuals who can best contribute to the process.

Along with the new taxonomy system, better corporate information will be the cornerstone of our strategy.

I will enable financial market participants to disclose their sustainable investment to their clients.

This will help us to establish standards and labels for sustainable investment products.

Green bond standard, green mortgages, an EU label for green financial products are just some examples.

Ladies and gentlemen,

While we want Europe to be at the forefront of the fight against climate change, that is not enough.

The EU is a polluter and we are actively doing something about it. But we account for ‘only' 9% of total global greenhouse gas emissions. Other countries need to play their part too.

With global cooperation, we can achieve much more together than alone.

That is why we launched the International Platform on Sustainable Finance with like-minded countries from around the world. It remains open for others to join, as we work together to green the global financial system.

We need to coordinate our green finance initiatives on the ground, otherwise the Platform cannot fulfil its potential.

Countries should link their sustainable financing requirements to global sources of funding - to scale up sustainable finance at the level that the world needs.

The fight against climate change illustrates the potential of what we can achieve on the international stage by working together.

While our aim is to generate economic growth, it must also be sustainable growth, so that we preserve and protect our natural world as much as possible.

The more that we can succeed in attracting green and sustainable financial inflows, the more growth and jobs we can generate.

And make a cleaner planet too. Thank you.