Germany unveils sustainable finance strategy

Sustainable Finance Strategy looks to mandate non-financial corporate reporting

The German government has this week set out a sustainable finance strategy including mandating sustainability reporting for companies.

The Sustainable Finance Strategy contains 26 measures including shifting civil service pensions into sustainable investments, increasing the government’s issuance of green bonds, and introducing a traffic light system for private investors to easily identify ESG investments.

A notable measure is the mandating of non-financial corporate reporting. Sustainability reports will have to fulfil certain criteria such as making company climate risks transparent. The reports will also have to be certified by auditors. “The German government will be making this a part of the upcoming negotiations for an ambitious new CSR Directive in the EU,” it said in a statement.

See also: – New EC measures in wake of European Climate Law

“Financial markets are an important partner in the transformation of our economy,” said German finance minister Olaf Scholz. “With sustainable financing we will, together, achieve the necessary social and environmental changes far more swiftly. And we are seizing these opportunities in order to channel investments into sustainable projects.”

German environment minister Svenja Schulze added: “Focusing on climate action and sustainability is the right strategy, also from an economic perspective. The Sustainable Finance Strategy will help mobilise investments urgently needed for climate action and environmental protection. This also makes the strategy an important lever for modernising our economy. Many investors have long recognised that sustainable, forward-looking technologies offer them the best business opportunities in the long term.

“The financial markets need clarity regarding which investments will still be worthwhile in the future – and which ones will become too risky because they are financing obsolete business models. For this approach to work, we need to clearly define what is sustainable and what isn’t. We are currently negotiating this at the EU level.”

The strategy also made clear its position on nuclear power, stating it cannot be considered sustainable and generates waste that affects 300,000 generations.

“Anyone who says otherwise threatens to undermine the credibility of a sustainable financial market policy. Nuclear power is no longer profitable, it isn’t clean and poses unavoidable, major residual risks that can no longer be imposed on the general public,” Schulze added.

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Natasha Turner

Natasha is global deputy editor at ESG Clarity, part of the Bonhill Group, and has been a financial journalist for six years. She has been shortlisted for Story of the Year and Investment Journalist of...