Sustainable finance is “on track” but we can’t lose sight of the human rights dimension

The European Commission has been receiving positive signs from industry when it comes to sustainable finance but admits that there is still work to be done. “If we want to keep sustainable finance on track we have to demonstrate that it works and that it has an impact on the ground”, said Marcel Haag, Director for Horizontal Policies at the European Commission Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA), at a Friends of Europe’s event to discuss the shortcomings and opportunities with respect to the sustainable finance agenda.

“What is clear from the feedback we get from stakeholders is that more can be done to ensure the usability of what we have put into place. Undeniably, the framework is rather complex. Our focus in the coming months will be on making sure that the framework is usable and can be used more easily”, said Haag.

The European Commission proposed, four years ago, an investment plan designed to mobilise at least €1 trillion in investments over the next decade. The European Green Deal Investment Plan is also meant to provide incentives to unlock and redirect public and private investment and offer practical support to public authorities and project promoters.

For Paul Tang, Member of the European Parliament Committee on Economy and Monetary Affairs, “trimming down the rules will not make the capital markets work”, noting the closed-door meeting of business and industry leaders taking place in Antwerp on the same day of Friends of Europe’s event and attended by Ursula von der Leyen, the President of the European Commission, and Alexander De Croo, Belgium Prime Minister, who currently holds the presidency of the Council of the European Union.

“[You have to make] sure that you have the services available for all kinds of financial institutions so that it becomes easier and cheaper to use. And also [show] that there are clear benefits [in] being green, that green finance in the end becomes cheaper. That’s what we see now: the costs are very clear, the benefits are elusive and the buy-in is limited”, said the outgoing MEP.

Signe Andreasen Lysgaard, Senior Advisor for Human Rights and Business Department at the Danish Institute for Human Rights, reminded the audience of the human rights concerns associated with the green transition. For example, in Colombia where offshore wind is picking up and accelerating at a very fast pace, this is resulting in “fishing and coastal communities losing their livelihoods”. In Zimbabwe, the search for lithium which is needed in “so-called sustainable investments” is causing spikes in child and forced labour unseen just five years ago.

“If we keep a blind eye and ignore [these examples] we risk the transition itself. It’s not just about doing the right things but making sure we face these real dilemmas that might otherwise cause friction, pushback and exacerbate global inequalities that we see as part of globalisation”, said Lysgaard.

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