Delegation of the European Union to the Republic of Korea

EU Ambassador Delivers Keynote Speech at International Conference on Climate Finance and Industry 2019

31/10/2019 - 02:34
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EU Ambassador to Korea Michael Reiterer delivered a keynote speech "EU's Sustainable and Green Finance Initiatives" at the International Conference on Climate Finance and Industry 2019 held on 31 October at Songdo Convensia in Incheon, Korea.

Keynote speech

" EU's Sustainable and Green Finance Initiatives"

By Dr. Michael Reiterer

Ambassador of the European Union to the Republic of Korea

10:30~10:50, 31, 10 2019

Premiere Ballroom & Conference Rooms, Songdo Convensia, Incheon, Korea

Distinguished guests,

Ladies and gentlemen,

It is a pleasure and honour to have the opportunity to speak about how the EU promotes sustainable and green finance initiatives.

I would like express my sincere gratitude to the Incheon Metropolitan Government and the Incheon Institute and Incheon Climate & Environment Research Centre for the kind invitation and successful organisation of this conference.

This is also an occasion to recognise the contribution of the Green Climate Fund. It is an essential organisation in developing this sector and accelerating green investment and development globally.

There has been considerable momentum towards a cleaner and sustainable future since the Paris Agreement was signed in 2015. We now know very well that climate change acts as a threat multiplier and increasingly as a threat, with serious implications for peace, security and economic development across the globe.

Recent protests, especially by younger people, and a "green wave" in the European elections are clear signs that citizens are demanding more ambition in fighting climate change and working towards more sustainable social models.  

Our climate and environment are in crisis. The year 2019 is most likely to be either the second or third warmest year on record, following years of record-high temperatures in this century.

Science leaves no doubt:  the world is not moving fast enough to prevent irreversible climate change, and it will require an unprecedented transformation of our energy, transport, buildings, urban, industrial and financial systems as well as changes in human behaviour to mitigate it, without delay.  The IPCC Report on 1.5 degrees is clear on these challenges.

Europe is therefore determined to lead the fight against today's climate threat. That is why the European Union is more committed than ever to implement the Paris Agreement fully and effectively.

 

So far, the EU has reduced carbon emissions by 22 % compared to 1990 levels. And we have a number of policies in place to go much further and reduce emissions by at least 40 % by 2030. Now, we are discussing how to go beyond 50%-55% by 2040.

 

Recognising the magnitude of the challenge, the EU goal is to be  completely carbon free by 2050.On 28 November 2018, the Commission proposed its strategy for a climate-neutral economy by 2050. This strategy shows how Europe can lead the way to climate neutrality, by turning the challenge into an economic opportunity.

 

IMassive investment will be needed in order to become climate neutral. At least 25% of the EU's next long-term budget will be dedicated to climate-related activities. The incoming president of the European Commission, Mrs Van der Leyden, advocated a "European Green Deal" as the leitmotiv of her Commission.

 

We cannot go alone and we cannot be successful alone. Therefore the EU is strengthening cooperation with all partner countries. The United Nations Climate Action Summit of last September in New York showed clearly that we still have a long way to go. UN Secretary General Gutierrez has asked the world leaders not to bring a speech, but bring an action plan. Not all of them have, however, honoured his invitation.

As the world's biggest climate finance donor, the EU together with its Member States is providing over 40% of public climate finance worldwide.

These contributions have more than doubled since 2013, exceeding 20 billion euros per year. And we will scale up our support even further, including through the European Investment Bank, which is the European Union’s financial arm, a bank larger than the World Bank but less known to the public.

The European Council has made it clear that it expects the EIB to increase its ambition to deliver on climate action and environmental sustainability, within the EU but also in supporting our climate objectives globally.

More and more people are realising that finance is one of the missing links in the fight against climate change, and the search for a more sustainable economy.

The challenge is how to scale this up, developing options for making a clean transition, and decarbonising other parts of the economy. There is already fierce competition in the global race to develop low-carbon technology and business solutions.

 

For example, on a windy day in December of 2018, almost a quarter of Europe's entire electricity production came from wind energy alone. Overall, Europe is on track to reach its goal of 20% renewable energy share by 2020.  Most of the technology we need to go carbon neutral is in fact already in use today, with good results.

 

The full engagement of the financial sector will be key in driving clean investment. Indeed, supporting Europe's climate ambitions will bring clear financial advantages and opportunities.

 

In only a few years, the market for green bonds has boomed. In 2017, global issuance of green bonds reached, €151 billion, covering a large chunk of clean energy investment.

 

But there is still a lot of work to do before green finance can match the scale of the climate problem.

 

The EU adopted an ambitious Action Plan for sustainable finance last year. We did not ignore UN SG Guterres request to bring a plan to the table. The EU Action Plan lays the ground for reorienting capital flows towards sustainable investment, and for embedding long-termism in the financial sector. It also aims to improve the handling of climate change risks in the financial sector.

 

We followed up the Action Plan with three legislative proposals:

 

1) First of all, we proposed to develop an EU-wide system for classifying what constitutes sustainable economic activities. Today, it can be quite difficult to identify how green a given investment or portfolio actually is. And this is one of the main obstacles to scaling up green finance.

 

The taxonomy for classifying sustainable economic actions is being developed step by step, based on scientific evidence. It will be used for a range of further measures to enable sustainable finance, such as an EU green bond standard. In addition, we are looking into extending the European Ecolabel to green financial products. Green options need to be easily identifiable for investors and the public.

 

2) Our second proposal concerns the disclosure requirements of asset managers, institutional investors, and financial advisors. While the number of investment managers who value sustainability is rising, it is not rising fast enough. Our proposal will require them to disclose how they integrate sustainability considerations into their processes.

 

3) Finally, the third proposal is about giving investors the tools to measure the carbon footprint of an investment strategy by using financial benchmarks. In particular, we have proposed to define standards for low-carbon benchmarks, and for benchmarks with a positive carbon impact. These benchmarks will help investors form a low-carbon portfolio, or measure the performance of their own low-carbon investment strategy.

 

A technical Expert Group on sustainable finance will assist in implementing this Action Plan. It is very helpful, especially on the taxonomy, where its members are busy drawing up guidelines to assess the sustainability of economic activities.

 

The experts recently published their first set of draft criteria for economic activities that could contribute to climate mitigation. These criteria are open for feedback now.

 

Furthermore, we are taking concrete action to mobilise private capital. In the coming weeks, the EU, in partnership with like-minded countries worldwide, is planning to launch the "International Platform on Sustainable Finance". This will help private investors to identify and take advantage of the green investment opportunities across the globe.

As you can see, 2019 is a crucial year for sustainable and green finance for Europe.

 

To summarise, we have already proposed three important legislative acts, on a taxonomy, sustainability disclosures, and low-carbon benchmarks. The European Parliament engaged very quickly reflecting the recent changes due to the elections. I have already referred to the pledge of the President-elect of the European Commission to present a European Green Deal in her first one hundred days in office.

 

Ladies and gentlemen,

 

We know that we must go further and faster. Changing the way we use our resources and invest will change the way we live and shape the world we live in.

 

I am heartened to see how your conference will facilitate discussion between experts on how each sector of the economy can generate the green finance needed for a sustainable future. I wish you success, and not forgetting the request from Secretary General Guterres, look forward to seeing concrete proposals.

 

Thank you very much.