Govt committee says Germany must become driving force for sustainable finance

The German State Secretaries’ Committee for Sustainable Development says the country should become a leading location for sustainable finance and promote its principles both to other governments and the private sector. According to a resolution released by the committee consisting of state secretaries from each of the government’s 14 ministries, rendering the financial industry as well as fiscal policy by the state more compatible with environmental goals is key to improving the country’s climate action record as well as other sustainable development goals identified by the United Nations. The committe is calling on the finance, environment and economy ministries to develop a strategy for gaining better oversight of the environmental and social impact of financial flows and to appoint a board of sustainable finance advisers from the financial sector, civil society organisations and from research institutions. The state secretaries note, however, that “possible sustainable finance activities must not conflict with financial market stability,” meaning regulations on capital cover and insurance should not be relaxed “for politically desirable investments”.

Financial industry initiative Green and Sustainable Finance Cluster (GSFC) Germany and environmental organisation WWF have published a policy roadmap for a national sustainable finance strategy. “So far, the finance sector has played almost no role at all in implementing the energy transition or meeting climate or environmental targets,” WWF sustainable finance head Matthias Kopp said in a press release. The roadmap aims to identify important fields of action for the coming years, in particular finding a common definition of sustainability in the financial sector. The EU is already working on such a taxonomy, and the German government should agree a joint position with the private sector to contribute to this process, GSFC Germany and WFF say.