Members of the financial industry have voiced their support for the European Commission’s new target to cut carbon emissions by at least 55% by 2030 as part of its plan to build back a stronger economy post Covid-19.
During her State of the Union address at the European Parliament plenary session yesterday (16 September), European Commission president Ursula von der Leyen (pictured) set the new “ambitious” target – an increase from a previous target of 40%.
“We know change is needed – and we also know it is possible. The European Green Deal is our blueprint to make that transformation,” she said.
“At the heart of it is our mission to become the first climate-neutral continent by 2050. But we will not get there with the status quo – we need to go faster and do things better.”
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Von der Leyen said the €750bn Next Generation EU Fund will be a key source of funding to help achieve this target, with 37% of the fund going directly towards European Green Deal objectives and 30% of the total assets in the fund to be raised via green bonds.
In addition, the funding would also go towards “lighthouse European projects with the biggest impact”, such as hydrogen, renovation and one million electric charging points.
According to the president, meeting the new emissions target would reduce the EU’s energy import dependency, create millions of extra jobs and more than halve air pollution, putting the EU “firmly on track for climate neutrality by 2050 and for meeting our Paris Agreement obligations”.
She noted that the new target was supported by 170 business leaders and investors, both large and small, who had already written to her calling for a new European target of at least 55% by 2030.
“And we have a solemn promise to leave no one behind in this transformation,” she added.
“With our Just Transition Fund we will support the regions that have a bigger and more costly change to make.”
Commenting on her speech, Nicolas Mackel, CEO of Luxembourg for Finance, said: “The EU is spearheading an ambitious and urgent pivot towards a greener, more sustainable economy. Delivering a bold Green Deal, and the critical investment that underpins it, will require focus and support from the financial services community across Europe.”
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Mackel said financial firms will need the right sustainable platforms to support this, including providing sustainability focused venues, processes, partnerships, taxonomy, technology, skills and regulations.
“Luxembourg’s financial centre stands in full support of the Green Deal and we will continue to develop the best possible launchpad and ecosystem for financing a sustainable future,” he said.
Harry Merrison, investment manager at Kingswood Group, supported the 55% reduction target, but questioned whether even this might not be “ambitious” enough.
“The post Covid-19 economic recovery offers a once in a generation opportunity to embrace a low carbon future and leave behind out-dated business models,” he said. “Today’s news is progressive, but is it ambitious enough given the inevitability of decarbonisation?”
He pointed to research from LGIM ,which shows that millennials are more likely that any other generation to want to reduce their exposure to fossil fuels, with 45% of millennials questioned even willing to take a performance hit for divesting their pension from fossil fuels.