Green Finance

Sustainable finance encompasses all activities by financial service providers that aim to reduce harm to the environment and climate, to promote social engagement and to encourage sustainable corporate governance. The Paris Agreement and the EU Action Plan derived from it set out concrete sustainability goals for the financial sector and thus represent a cornerstone of sustainable finance. Sustainable finance means that in the future, capital will flow towards more sustainable investments, environmental risks will be taken into greater account and transparency will be encouraged. In this way, the financial services sector is meant to support the transformation of the overall economy and guide it towards sustainability.

This vision will be realised by making changes to disclosure obligations, MiDIF II and the Insurance Distribution Directive (IDD), as well as by introducing a host of new rules and regulations such as a label for green financial products, a standardised EU classification system, new EU benchmarks and various EU standards for non-financial reporting.

The regulatory framework will set the course. Financial service providers will need to work to bring their economic objectives into harmony with the new rules and regulations. A challenge, not only where a company's business with clients is concerned, but also its internal organisation and corporate culture. The climate crisis and the coronavirus pandemic are going to change the business world so drastically that banks and insurers will also be forced to make significant changes to their business models. Financial institutions therefore need to go beyond the regulatory minimum. Only those companies which take a holistic approach – starting with their own strategy – will be able to stand out from the competition and pioneer new business areas.