Bulgaria is set to receive over EUR half a billion in EU funds to cover the initial expenses related to the fight against the coronavirus epidemic.
Bulgaria will receive this amount as soon as the report under this new instrument is approved by the European Parliament at second reading, Bulgaria’s MEP Andrey Novakov said for BNR. “This instrument grants financing retrospectively for ongoing projects aimed to cope with the Covid-19 crisis”. MEP Novakov added.
By Lydia O’Kane
Every year on November 21, World Fisheries Day is observed to highlight the importance of the marine-based labour sector.
An estimated 59.5 million people are employed in this industry, and one out of two workers is a woman.
A message issued on Friday to mark World Fisheries Day by the Prefect of the Dicastery for Promoting Integral Human Development, Cardinal Peter Turkson, highlights that “Asia has the highest number of workers, in this sector, and contributes some 85 per cent of the world total labour force; and with 3.1 million vessels, it accounts for 68 per cent of the global total fishing fleet.”
As the world battles the COVID-19 pandemic, Cardinal Turkson notes that the outbreak has had “dramatic consequences for the economies of many countries and a severe impact upon more vulnerable sectors such as fisheries.”
Speaking to Vatican Radio, Martin Foley, Chief Executive Officer and European Regional Coordinator of Stella Maris UK, an agency of the Catholic Church which offers practical and pastoral care to all seafarers, welcomed the Cardinal’s message.
“It demonstrates the support of the Church through the Dicastery for Promoting Integral Human Development, for fishers and their families that during these challenging times the Church through Stella Maris’ mission to seafarers and fishers remains close to them.”
As the world grapples with this global pandemic, one of the problems that have been laid bare is a lack of Personal Protective Equipment (PPE) for fishers. Addressing this issue, Mr Foley said that even pre-pandemic “many fishers were denied adequate PPE. Now with the added risks posed by the pandemic, it’s even more important that fishers are supplied with adequate PPE.”
He went on to say that Stella Maris’ Chaplains in many ports around the world are giving face masks to fishers and helping them with basic hygiene measures. The CEO also stressed that providing this equipment was “primarily the responsibility of their employers”.
As the world grapples with this global pandemic, one of the problems that have been laid bare is a lack of Personal Protective Equipment (PPE) for fishers. Addressing this issue, Mr Foley said that even pre-pandemic “many fishers were denied adequate PPE. Now with the added risks posed by the pandemic, it’s even more important that fishers are supplied with adequate PPE.”
He went on to say that Stella Maris’ Chaplains in many ports around the world are giving face masks to fishers and helping them with basic hygiene measures. The CEO also stressed that providing this equipment was “primarily the responsibility of their employers”.
President Armen Sarkissian met with Ambassador Andrea Wiktorin, the Head of the European Union Delegation to Armenia.
They talked about the latest developments in the Nagorno-Karabakh (Artsakh) conflict and the resulting situation in Armenia and Artsakh.
(LWI) – Following the recent reports about attacks on churches and Christian communities in Indonesia, the General Secretaries of the Lutheran World Federation (LWF) and the World Communion of Reformed Churches (WCRC) have urged Indonesian President Joko Widodo to better protect Christian communities in the country.
Worshipping together, and in line with current regulations on COVID-19 prevention, should be available to all faiths in Indonesia, wrote LWF General Secretary Rev. Dr. Martin Junge and WCRC General Secretary Rev. Dr. Chris Ferguson in a letter to the President Widodo.
“In this time of the COVID-19 pandemic, people and communities are facing significant challenges for which spiritual guidance and nourishment is necessary,” the two General Secretaries said.
In this time of the COVID-19 pandemic, people and communities are facing significant challenges for which spiritual guidance and nourishment is necessary.
“We have been in communication with our member churches in Indonesia, who have confirmed the struggles they are facing, including the recent attacks against their houses of worship and their ability to offer online worship.” They refer to “deeply disturbing” reports of church destruction and demolition as well as restrictions on offering online or alternative worship arrangements specifically aimed at Christian churches.
In the joint-letter, which follows earlier letters issued by the Indonesia Council of Churches (PGI) and the LWF National Committee in Indonesia (KNLWF), the LWF and WCRC General Secretaries call upon the Indonesian president to ensure that churches are able to worship in a safe way, that also conforms with public health guidance to stop the spread of COVID-19.
“This is an important right that is enshrined in International Human Rights Law and is rooted in justice.” they write. “Just as we have continued to ask governments all over the world to ensure that this right is fully enjoyed by all citizens, we urge you to take decisive steps to address any policies, laws, and actions that prevent minority religions in Indonesia from exercising their right to practice their religion.”
LWF in Indonesia has 13 member churches, the majority of them located on Sumatra. WCRC and LWF together represent more than 200 million Christians in 100 countries.
LWF/C. Kästner
South Africans looking for an offshore base, visa-free access to Europe and the possibility of dual-citizenship, are increasingly investing in property in Portugal, says migration, wealth and forex specialists, Sable International.
The Golden Visa Programme developed by the Portuguese government, which offers a financially accessible and efficient process, whereby non-EU citizens can obtain Portuguese residence permits and citizenship via investment in the country, remains very popular and in fact during the 2020 Covid crisis has shown no sign of tapering.
By mid-2020, over 8,736 residence permits had been issued since the start of the programme, equating to 14,936 residence permits if the family members of the main applicant were included.
With the visa, applicants and their families can live and work in Portugal as well as travel visa-free throughout the European Schengen Area. “A key benefit of the programme is that applicants don’t need to immigrate to Portugal to hold the Golden Visa.
They only need to spend (on average) seven days a year in Portugal to meet the residency requirements of the programme,” said Andrew Rissik director at Sable International.
“It means you can make a sound offshore investment and secure your family’s future without the hassle of relocating to a completely new country.”
The Golden Visa not only allows the holder to live and work in Portugal, but also affords them the right to visa-free travel throughout the European Schengen Area.
This has been especially attractive to executives wishing to work within the European Union (EU). Through the Portuguese residency programme, South Africans can qualify for permanent residence after five years. Portuguese citizenship (an EU passport) gives you the right to live and work in the EU, which currently includes the United Kingdom.
Rissik said that South Africans are mostly attracted to the prospect of dual residency, visa-free travel in Europe, the option to invest a relatively affordable overseas property, and the great tax benefits.
Getting the Golden ticket
To qualify for the programme, applicants need to make an investment in the Portuguese economy. “There are a few routes available to investors – the most popular are the €350,000 private equity capital investment and the purchasing of property with a value of €500,000 or €350,000,” said Rissik.
“Once you have invested, you will be granted a residency permit, which allows you to enter and/or live in Portugal and travel freely within most EU countries. Your Golden Visa is valid for an initial period of two years and is renewed for a further two years every two years.”
To become eligible for permanent residency or citizenship, applicants need to hold their investment alongside their visa for a full five-year period. “Applicants will have to spend time in Portugal over the course of the visa period; but it isn’t extensive ranging from one to two weeks a year,” said Rissik.
As a resident holder, you are required to spend a minimum of 35 days in Portugal over this five-year period.
Why Portugal
Rissik said that most South Africans are attracted by the secure lifestyle. It was voted as the third safest country in the world in the Global Peace Index 2019.
“The tax benefits are also compelling – Portugal has one of the most favourable tax regimes in the EU for foreigners looking to become tax resident. Individuals who are not tax residents only pay tax at source on income derived in Portugal.
“However if one becomes tax resident and spends more than 183 days a year in the country, you are exempt from almost all foreign source income tax under the so-called NHR tax scheme. There’s also no inheritance, gift or wealth tax,” said Rissik.
Covid-19 aside, Portugal has a robust economy, he said. Since the global financial crisis, Portugal’s economy has been transformed from 2008 –2020 to one of the fastest growing in Europe. Portugal has had above-average GDP growth. It has a leading tech hub and a strong manufacturing sector.
In real estate, Portugal was ranked the ‘Hottest’ property market in Europe (Bloomberg 2019), with high affordability, boasting one of the lowest House Price-to-Income ratios in Europe. Forbes’ named Portugal the Most Investible Country of 2020 and ‘Knight Frank’ forecast best price growth in Portugal for 2020-2021 post Covid-19.
Buyer beware
“We are seeing a strong uptake for Portugal investments even through Covid, but the high demand also means there are a lot of unscrupulous operators out there selling properties that are bad investments or that do not actually qualify for the Golden Visa,” said Rissik.
“We have been on the ground in Portugal doing property and visas since 2012, and we have the highest number of South Africans invested there.
“You also need to look at all the options, is this this just a Plan B, or do you plan to relocate and start a business or work there or do you want to retire in Portugal – you might find that a Retirement Visa is better for your purposes than applying for a Golden Visa.”
UNIQUE ID: 201120_1
Manila, 20 November 2020
The European Union has pledged to spend €1.05 million (roughly 60 million Philippine Peso) in humanitarian aid funding to deliver emergency relief assistance to families affected by typhoon Vamco. Known locally as “Ulysses”, it is the latest in a series of destructive typhoons to hit large parts of the Philippines’ most populous island of Luzon, including the national capital, Metro Manila, in recent weeks.
“The EU is scaling up its humanitarian assistance in the Philippines in response to the devastating typhoons that have hit the country over the past month,” *said Arlynn Aquino, who oversees the EU’s humanitarian response in the Philippines. *“The additional contribution will help to get much-needed aid to the most vulnerable people to help them go through this difficult time”.
Vamco hit the country whilst it is still struggling to cope with the devastating impact of powerful typhoon Goni (locally known as “Rolly”), which struck in early November. It has so far affected more than three million people, with more than 440,000 already forced to flee their homes and seek shelter elsewhere, including in evacuation centres.
The EU funding will support humanitarian aid partners who are already on the ground to respond to the immediate needs of those most in need. This includes shelter, food, health care and access to clean water, safe sanitation and good hygiene, as well as other vital aid.
The funding is part of the EU’s Acute Large Emergency Response Tool (ALERT).
Background
*Typhoon Vamco, locally known as “Ulysses”, is the fifth storm to hit the archipelago nation over the past three weeks. It made landfall in several towns across Quezon province in Luzon on the evening of 11 November. With maximum sustained winds of 155 kilometres per hour, the system caused heavy downpours and severe flooding across the region, damaging more than 65,000 houses. In Metro Manila, floodwaters of up to 4.5 feet left many parts of the capital submerged, impacting in excess of 50,000 people. Widespread power shortages and infrastructural damage have also been reported. *Central Luzon, located two hours north of Manila, is the worst-hit region where more than 1.7 million have been people affected. As assessments are still underway, the true scale of the damage is currently unclear.
The acute large emergency response tool (ALERT) is used to respond to large natural disasters where over 100,000 people or over 50% of the population are affected. Depending on the type of disaster, the aim is to allocate funds within 24 to 48 hours of the onset of the emergency.
Contact:
Peter Biro, Regional Information Officer for Asia and the Pacific, European Civil Protection and Humanitarian Aid Operations: [email protected](link sends e-mail) (+66 2 305 2768).
ALBANY, N.Y. (CNS) — New York Gov. Andrew Cuomo’s order limiting the size of a congregation for in-person services at Catholic churches and other houses of worship does not target religious gatherings on “the basis of their beliefs,” but is based on “the documented fact of their COVID-19 super-spreader potential.”
This is the argument New York Attorney General Letitia James, representing Cuomo, laid out in the state’s response to the Brooklyn Diocese’s Nov. 12 filing with the U.S. Supreme Court seeking an injunction against the governor’s order.
The diocese is challenging Cuomo’s order on religious freedom grounds. The state of New York filed its response by the Nov. 18 deadline set by the court.
The diocese said the order’s provisions “violate the free exercise clause” of the First Amendment by limiting “in-person ‘house of worship’ attendance to 10 or 25 people” but allowing “numerous secular businesses to operate without any capacity restrictions.”
“There is nothing more important than the safety of our parishioners. That is why we have worked diligently to implement strict COVID-19 safety rules that go above and beyond state requirements,” Brooklyn Bishop Nicholas DiMarzio said in an October statement, after Cuomo issued his executive order.
When he issued his order Oct. 6, James said, Cuomo “went to great pains” to say it was not aimed at religion and was “about mass gatherings. One of the prime places of mass gatherings are houses of worship.”
“The diocese’s interest in holding indoor religious gatherings of potentially hundreds of people … does not outweigh the need to prevent” the spread of COVID-19 in already severely affected areas, said James, who told the Supreme Court the diocese’s application for a writ of injunction “should be denied.”
On Nov. 16, Agudath Israel of America, an umbrella organization that represents affiliated Orthodox Jewish congregations across the U.S., and two Orthodox congregations in New York City filed an emergency application with the high court for an injunction to stop Cuomo’s order. The state had to file a response by Nov. 20.
In the meantime, the Brooklyn Diocese announced Nov. 18 that its 69 Catholic schools and academies in Brooklyn and Queens, the two New York boroughs that make up the diocese, will continue in-person learning.
The announcement came in response to Mayor Bill de Blasio’s decision to close New York City public schools indefinitely starting Nov. 19.
“I am frustrated that the mayor’s announcement was made as Catholic schools and academies throughout Brooklyn and Queens were dismissing our students” for the day, said Thomas Chadzutko, diocesan superintendent of Catholic schools. “I want to make it clear to parents, teachers, staff and students that the mayor’s announcement only pertains to New York City public schools, and our schools will be open tomorrow (Nov. 19).”
He added, “We have worked tirelessly to ensure that our school community remains safe for everyone, and we will continue to ensure strict compliance with all health and safety protocols.”
ally Rooney, Zadie Smith, and Toni Morrison. Composite: Patrick Bolger, Getty, Murdo MacLeod
Elena Ferrante, the bestselling pseudonymous Italian author behind My Brilliant Friend, has named her favourite 40 books by female authors around the world, with Toni Morrison, Sally Rooney and Zadie Smith all making the cut.
The author, whose quartet of Neapolitan novels has sold 13m copies worldwide, has published her list on Bookshop.org, the online store that recently launched in the UK and gives a proportion of sales to independent booksellers. Ferrante’s UK publisher, Europa Editions, is returning their 10% sales commission from Ferrante’s list to Bookshop.org so it can be shared among the 300 independent bookshops that have signed up to the site so far.
Ferrante described her choices as being united by the theme of “stories of women with two feet, and sometimes one, in the 20th century”. All of the books are available in English, but span the world: Japan to Nigeria, India to Brazil.
The list include Pulitzer winners – Toni Morrison’s Beloved, Elizabeth Strout’s Olive Kitteridge and Jhumpa Lahiri’s Interpreter of Maladies – and Booker winners such as Margaret Atwood’s The Blind Assassin and Arundhati Roy’s The God of Small Things. It also includes several Italian bestsellers: Arturo’s Island by Elsa Morante, first published in 1957, about a boy coming-of-age on the Neapolitan island of Procida; Accabadora by Michela Murgia, following a girl adopted by a secretive Sardinian woman; Anna Maria Ortese’s short story collection Evening Descends Upon the Hills; Family Lexicon by Natalia Ginzburg, a novel-cum-memoir first published in 1963 and translated to English in 2018; and Donatella Di Pietrantonio’s A Girl Returned, about an orphan who is returned to her birth mother and a life of poverty.
Several of the authors voiced their pleasure at being chosen by Ferrante. Smith, whose 2000 debut White Teeth made the list, said: “Reading all of Ferrante slowly, in Italian, and then with obsessive speed, in English, have been two of the great reading experiences of my life. I am thrilled to be included in this wonderful initiative on behalf of independent bookshops.”
US author Sheila Heti said: “It means so much to me that she connected with my book, Motherhood. My favourite of hers is The Days of Abandonment – excruciating and perfect.” And Mieko Kawakami, the Japanese author of Breasts and Eggs, also selected by Ferrante, described her as “a writer who continually creates lives and worlds with strokes both delicate and grand. To hear that she has read my work, and that it has somehow touched her creative world, brings me the greatest joy and fills me with courage.”
Women’s prize founder Kate Mosse said she was “delighted to see Ferrante celebrating so many exceptional books by her fellow women writers – we all love to have a sneak peak into what our favourite authors love to read, what they value, and this list is magnificent.”
Bookseller Claire Harris, of independent bookshop Lutyens & Rubinstein, called it “a great list”. “I would happily read my way through it, some of them again and others I’d like to give a go,” she said. “There are authors on the list that probably wouldn’t be read without someone like Ferrante bringing attention to them, and she has a really good balance of famous and the not-so-well-known on this list. There is something for everyone.”
Americanah by Chimamanda Ngozi Adichie (Fourth Estate)
The Blind Assassin by Margaret Atwood (Virago)
The Enlightenment of the Greengage Tree by Shokoofeh Azar, translated by Anonymous (Europa Editions)
Malina by Ingeborg Bachmann, translated by Philip Boehm (Penguin Classics)
A Manual for Cleaning Women by Lucia Berlin (Picador)
Outline by Rachel Cusk (Faber)
The Year of Magical Thinking by Joan Didion (Harper Perennial)
A Girl Returned by Donatella Di Pietrantonio, translated by Ann Goldstein (Europa)
Disoriental by Négar Djavadi, translated by Tina Kover (Europa Editions)
The Lover by Marguerite Duras, translated by Barbara Bray (Harper Perennial)
The Years by Annie Ernaux, translated by Alison Strayer (Fitzcarraldo)
Family Lexicon by Natalia Ginzburg, translated by Jenny McPhee (Daunts)
The Conservationist by Nadine Gordimer (Bloomsbury)
Fates and Furies by Lauren Groff (Windmill Books)
Motherhood by Sheila Heti (Vintage)
The Piano Teacher by Elfriede Jelinek, translated by Joachim Neugroschel (Serpent’s Tail)
Breasts and Eggs by Mieko Kawakami, translated by Sam Bett and David Boyd (Picador)
Interpreter of Maladies by Jhumpa Lahiri (Flamingo)
The Fifth Child by Doris Lessing (Flamingo)
The Passion According to GH by Clarice Lispector, translated by Idra Novey (Penguin Classics)
Lost Children Archive by Valeria Luiselli (Fourth Estate)
Arturo’s Island by Elsa Morante, translated by Ann Goldstein (Pushkin)
Beloved by Toni Morrison (Vintage Classics)
Dear Life by Alice Munro (Vintage)
The Bell by Iris Murdoch (Vintage Classics)
Accabadora by Michela Murgia, translated by Silvester Mazzarella (MacLehose Press)
Le Bal by Irene Nemirovsky, translated by Sandra Smith (Vintage)
Blonde by Joyce Carol Oates (Fourth Estate)
The Love Object: Selected Stories by Edna O’Brien (Faber)
A Good Man Is Hard to Find by Flannery O’Connor (Faber)
Evening Descends Upon the Hills: Stories from Naples by Anna Maria Ortese, translated by Ann Goldstein and Jenny McPhee (Pushkin)
Gilead by Marylinne Robinson (Virago)
Normal People by Sally Rooney (Faber)
The God of Small Things by Arundhati Roy (Harper Perennial)
White Teeth by Zadie Smith (Penguin)
Olive Kitteridge by Elizabeth Strout (Simon & Schuster)
The Door by Magda Szabò, translated by Len Rix (Vintage Classics)
Cassandra by Christa Wolf, translated by Jan van Heurck (Daunts)
A Little Life by Hanya Yanagihara (Picador)
Memoirs of Hadrian by Marguerite Yourcenar, translated by Grace Frick (Penguin Classics)
21 November 2020
Mr Mersch, is it part of the European Central Bank’s mandate to engage with the capital market segment of green and sustainable finance?
The EU Treaties require the ECB to give primacy to the objective of price stability. If ECB’s engagement with the green and sustainable financial sector were necessary for maintaining price stability in the euro area, it would fall within the remit of our primary objective. I don’t think that applies at present.
In addition, the ECB has what are known as secondary objectives. Without prejudice to our primary objective of price stability, we support the general economic policies in the EU “with a view to contributing to the achievement of the objectives of the Union”. One of these objectives is to work towards “a high level of protection and improvement of the quality of the environment”. This justifies why the ECB is also looking into sustainability.
However, contrary to what some may argue, that does not mean that the ECB is free to take the initiative and decide itself how “a high level of protection and improvement of the quality of the environment” is to be achieved. For good reason, that remains the privilege of elected politicians.
What are the risks facing green and sustainable finance over the coming years?
I would see it as a risk if green finance degenerated into a pure marketing tool. If investors want to make the world a greener place, they need to know how their investments contribute to more sustainability. To put it in technical terms, I see the risk of informational market failures if information on the sustainability of businesses and financial products is inconsistent, largely not comparable and at times unreliable or even completely unavailable. Definitions of what constitutes a sustainable investment are often subjective and inconsistent. The EU taxonomy is a promising initiative, albeit incomplete. Its practical usability remains a challenge. Plans are also under way for widely applicable industry standards.
What else is needed?
Better and more standardised non-financial reporting will also be crucial. This is essential for correctly pricing the risks. Sound reporting is the cornerstone of appropriate risk management.
Finally, financial institutions, including banks, need to ensure they can identify at an early stage, and deal with, the risks emerging from the effects of climate change and a rapid transition to a carbon-neutral economy.
Only once these prerequisites are met can sustainable finance prosper and have a tangible impact on the real economy. Otherwise there remains a risk of “greenwashing” and of an unsustainable “green bubble” detached from fundamental data.
The EU taxonomy for green and sustainable finance is a complex system of classification intended to give investors and providers of financial products certainty as to what can be classified as green and sustainable. Is this a masterstroke by the EU that will advance this market segment and possibly also serve as an example for other countries and regions?
The EU Taxonomy Regulation is important. A sound classification system provides investors with valuable information for their investment decisions. The taxonomy was designed with green bonds in mind. Its application to other financial products may not be as straightforward and the overall design might need to be adjusted.
Moreover, the system is indeed very complex.
What does that mean for risk assessment in practice?
I see a certain gap between its envisaged objective and its practical usability.
However useful the taxonomy may be for green investment decisions, it will not help in the risk assessment of economic activities exposed to climate risk. Finally and more fundamentally, the taxonomy is only one piece of the puzzle: granular data at the corporate level are required in order for it to be usable.
If we address these shortcomings, the EU can set an example for the parallel processes now under way in other countries. We have one of the most advanced frameworks for sustainable finance. The EU taxonomy can be an important element in promoting the EU regulatory approach abroad, and in strengthening the EU’s role as a global hub for sustainable finance.
When do you expect financial markets and market participants to be fully green and sustainable?
I don’t think that the entire financial sector will one day be green. There are many industries that are neither clean nor dirty and they also raise funding on the market. Moreover, I don’t think we can stop climate change by choking off entire sectors of the economy. We should rather create the right incentives through, say, fiscal policy measures, including carbon pricing and other regulatory tools.
Finally, the financial sector can indeed help, but it can’t save the planet on its own.
We are now transitioning towards green and sustainable capital markets: what specific transition risks do you see in this phase?
The transition towards a greener and more sustainable capital market may lead to a repricing of assets. If this adjustment happens abruptly, i.e. if the redirection of capital proceeds in an unexpected or disorderly way, we talk about transition risks.
However, compared with the potential economic losses arising from climate risks, the transitory losses that may occur are paltry. But individual banks could certainly be hit hard: the bulk of exposures to the most energy-intensive borrowers are held by just a few banks. In other words, a few banks have very high exposures.
Are the banks already providing sufficient disclosure on specific risks that are neither green nor sustainable, i.e. largely brown assets, and do you already incorporate these in the ECB’s banking supervision? How far do the banks go in their disclosure and do they go far enough for the ECB?
I see a need for further action in that regard. It’s true that the disclosure of climate-related risks has improved, but mostly the information is just not detailed enough, and only seldom supported by quantitative data.
We will soon be publishing a “Guide on climate-related and environmental risks”. The Guide sets out how, in our view, institutions should take climate and environmental risks into consideration in their business strategies, governance and risk management frameworks and how these are to be disclosed. We looked at the disclosure for last year from a sample of the institutions that we supervise – more than half of them did not even meet the minimum requirements set out in the Guide. In relation to this we will soon be publishing a report on the disclosure of environmental risks of the banks under our supervision.
Does that provide any first lessons for the ECB?
Yes. That is why we will devote our 2022 stress test to the topic of climate change. This stress test should not only be analytical and top-down, but, in the hope of a better data situation, a better taxonomy and better standards, also enable a meaningful bottom-up approach.
Are you concerned that a major case of greenwashing could arise, which could trigger a chain reaction and result in a sharp downturn in the financial markets? Are the markets sufficiently forearmed against this, or in other words, are they stable enough?
There is no doubt that greenwashing is an issue, even if an improvement is in sight. The European Commission will soon present a legislative proposal for an EU green bond standard. However, a green bond does not necessarily tell us how green a company is as a whole. The classification relates instead to individual assets that these bonds are intended to finance. These assets are only part of the company’s balance sheet, which could indeed also include conventional assets with a bigger carbon footprint. Thus, on their own, green bonds are not sufficient for a greener real economy.
What would in your view be helpful?
A welcome Commission initiative concerns the introduction of an EU ecolabel for financial products and in particular for investment funds. This should allow retail investors who are concerned about the environmental impact of their investments to rely on a trustworthy and verified label and hence make informed investment decisions. At the same time incentives could be created for financial markets to develop more products with a reduced or positive environmental impact.
It remains a problem that markets may not yet be able to correctly assess the fundamentals of green financial products. This is for instance the case with green bonds, where there are large differences in the extent to which the bond proceeds are truly invested in green and sustainable projects.
How important are sustainability ratings? Do you already deploy these ratings in your supervision? Are the ratings robust enough for an appropriate estimation of risks and opportunities?
The current environmental, social and governance (ESG) ratings of banks do not reflect their lending to companies with high carbon emissions. Similarly, they are also not an appropriate measure of credit risk. These ratings are more concerned with social responsibility.
Carbon emission figures could provide a better proxy for the physical and transition risks to which companies are exposed.
An issue that comes up repeatedly is that each agency uses different metrics for their sustainability ratings: the same data are assessed or weighed in different ways. Should providers therefore report several sustainability ratings or just one?
The fact that ratings vary so much across providers is largely due to three factors: first, the underlying raw data and calculation methodologies; second, the methodologies used to compute the ratings; and, third, the qualitative elements underlying each assessment. Therefore, providers should present metrics and ratings in a transparent way so that investors can understand them.
What is even more important is that data gaps in the underlying data are closed. This brings us back to disclosure, for which the taxonomy framework and reliable labels for sustainable financial products – including an EU standard for green bonds – are crucial.
Does the ECB deploy green and sustainable investments in its fund management – of pension funds, say? If so, what are the investment criteria, what kinds of investment are excluded?
The pension funds are managed autonomously. The management has undertaken to adhere to the United Nations Principles for Responsible Investment and thus to include sustainability standards.
In addition, we have increased the share of green bonds in our own funds portfolio and will continue to do so in future. We follow the Sustainable and Responsible Investment Guide for Central Banks’ Portfolio Management from the Network for Greening the Financial System, of which we are a member.
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