Against the environmental crisis, political priority must be given to sustainable finance and a sustainable economy. This can be achieved, in particular, through a clear, stable and incentive-based policy framework, which should also encourage the implementation of innovative projects with high added value and which respect the environment.
In Europe, one financial project, in particular, has been recently elaborated by many contributors, then brought to politicians and the media. It is now gaining an increasing attention. This initiative is called the “Finance-Climate Pact” (in French, the “Pacte Finance Climat”). I strongly encourage you to visit and spread their website (https://www.pacte-climat.eu/en/).
Here is the introductory video:
The Finance Climate Pact tables the most ambitious proposal among the EU institutions: 40% of the EU budget should be devoted to the fight against climate change and its consequences, be it environmental, economic or social .
The Finance Climate Pact has been adopted on 17th October 2018 by the European Economic and Social Committee (EESC) which will push forward the discussion at the European Union.
"There will be no jobs and no entrepreneurship on a dead planet. It is up to us to avoid this nightmare scenario and we need to act now”, says Rudy de Leeuw, rapporteur for the opinion. (See the video here: https://youtu.be/qFIe4btLO3o ).
One aim of the pact is to create jobs by financing projects that will ultimately reduce our CO2 emissions, and reduce our energy and resource consumption. According to the French Agency for the Environment and Energy Management (ADEME), the fight against climate change could lead to a net increase in jobs of five to six million by 2050; and the European Commission predicts three million additional jobs in the renewable energy sector by 2020.
To achieve the above, the Finance Climate pact puts forward a number of recommendations and real actions to be undertaken. Importantly, it specifically stipulates HOW these actions should be financed, and give a list of the European funds that could be used, and a number of loans that could support small to middle enterprises to take actions against climate change. It is expected that the Finance Climate Pact will create a huge number of jobs while allowing a shift in our environmental impact.
Against the backward-looking national thinking of many European countries, I don’t know if the Finance Pact will be successfully accepted. However, it is clear that the Pact initiative put forward real measures to emulate collective actions to face the challenges and to promote a sustainable model that helps to effectively combat inequality and to strengthen democracy.
It is very encouraging to see so many people backing up and sharing this citizen-led initiative to make it considered seriously by the European council. The Finance Pact is really a huge piece of work that deserves our attention, and will, I hope, by used as a template for further initiatives in other countries.
Recommendations and some actions to be taken
One aim should be to identify the sectors for which funds would be the most beneficial and have the best cost-benefit ratio for the environment, the public and the economy (energy, housing, agriculture, mobility, transport, recycling, water, etc.). The circular economy model should be given priority as much as possible and its regulatory framework improved. Investments in the energy efficiency of buildings will also need to be encouraged.
The finance-climate pact requires the establishment of a clear and predictable European policy framework over the longer term, with a view to ensuring planning security for investments. The next multi-annual financial framework (2021-2027) must promote sustainable economic development and high-quality jobs by contributing to the transition to a low-carbon economy by 2050.
It is crucial that SMEs, as well as cooperatives and the smallest organizations present at all local levels, can also take part in sustainable projects and that funds are allocated to them as a priority. Steps must, therefore, be taken to ensure that access to finance is not an obstacle .
In addition, it is important to adopt a multi-level approach and to involve all relevant actors, both public and private, so as to promote and integrate the initiatives, plans and actions of networks of regions, cities and municipalities involved in the fight against climate change and the implementation of the Paris Agreement, as stated by the CoR in a recent opinion.
Lastly, the finance-climate pact, which requires full commitment and determination in both the public and private spheres, will need to take into account the support measures proposed by the Commission, such as taxonomy (classification), the obligation for institutional investors to mainstream "sustainability", information for investors, recalibration of banks' own funds, ensuring that businesses are more transparent when it comes to disclosing information, and EU labels (suggested by the European Parliament).
2 European Economic and Social Committee NAT/735, European Finance-Climate Pact, Opinion
3 EESC opinion on the Road from Paris, OJ C 487, 28.12.2016, p. 24 .
4 CoR opinion on Climate finance: an essential tool for the implementation of the Paris Agreement, OJ C 54, 13.2.2018, p. 9 .