Since the adoption of the Paris Agreement two years ago, significant progress has been made. The signing of the Agreement demonstrated the determination to fight climate change and marked a major milestone, placing these issues on the agendas not only of legislators, international organisations and regulators, but also of the private sector and, no less importantly, of financial institutions.
Financial institutions, especially in an economy such as Spain’s and Europe’s, play an essential role in financing the transformation towards a sustainable economy and financial system. While Spanish banks have already taken measures to reduce their direct impact on the environment, their main contribution lies in providing support and financial solutions for sustainable projects and companies.
For this reason, the banks belonging to AEB, aware of their responsibility, undertake to use their expertise in lending, investment and advisory services to achieve sustainability objectives for the benefit of society and in cooperation with all stakeholders across the entire financing chain.
Banking in Spain, as the main source of financing for households, SMEs, large companies and infrastructure, is stepping up its efforts to integrate environmental strategies and decisions related to climate change not only into its risk management, but also to identify new opportunities for green investment and finance. This requires an integrated approach to sustainability with clear responsibilities at the highest management level.
Being able to describe and measure these risks within a uniform taxonomy that takes into account the different business models, sizes and approaches of institutions will bring a clearer understanding of these risks and how to mitigate them. That is why AEB is part of the European Banking Federation’s green finance group, which supports initiatives leading to the convergence and harmonisation of definitions to provide a common basis for measurement, reporting and certification, paving the way for the development of new products that could be offered on a comparable basis.
In addition, AEB member banks are aware that, for green finance to become a core part of the banking business, they must accelerate their efforts to raise awareness in society at large and, in particular, to educate retail investors and improve understanding of the positive consequences of sustainable projects.
AEB also supports the work of the European Commission’s High-Level Expert Group (HLEG) and hopes that its final recommendations, to be issued in January 2018, will establish a robust, coherent and stable legal framework for supervision and regulation, including specific incentives to support and enable all stakeholders to promote long-term green and sustainable finance. This initiative, together with the pilot group led by UNEP FI to implement the TCFD[1] recommendations of the FSB[2], involves Spanish banks and represents major progress towards that objective of sustainable finance.
Financing sustainable development activities requires drawing on various funding flows, both private and public. That is why European banks have committed to working with the public sector to accelerate sustainable development and its financing. The Paris One Planet Summit this 12 December is an example of this collaboration; it will be a summit at which more than 100 countries and representatives of international bodies will present concrete actions that have been carried out against climate change, as well as other new and innovative ones that will be undertaken in the short term. A great opportunity to celebrate the Paris Agreement and reaffirm the commitment of banks in Spain to sustainable growth.
[1] Task Force on Climate-Related Financial Disclosure of the Financial
[2] Financial Stability Board
