Brussels pushes to create the world’s first green gold standard

Brussels pushes to create the world’s first green gold standard

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The EU wants to revolutionise the world of green finance. Brussels officials, MEPs and member states are currently trying to thrash out plans for a gold standard in green investment they hope will unleash tens of millions of euros of private money to fund the transition to a more sustainable world.

The project has a classically boring Brussels name — the “taxonomy” for sustainable activities — but the implications are potentially transformative. The EU wants to become the first supranational regulator to write rules that banks and funds will have to comply with when they claim to launch “green” products or investments.

As it stands, there is no global benchmark to judge just how green a financial product is. Funds and banks can sell and label sustainable finance products without an independent arbiter checking if reality meets the hype. The point of the EU’s work is to stamp out this so-called “greenwashing”.

The importance of the taxonomy and other green regulatory exercises has rocketed in the last year as European governments have woken up to voters’ clamour to address the climate emergency. EU commission vice-president Valdis Dombrovskis has called the taxonomy the “single most important piece of legislation” aimed at the markets that can help governments meet global emission targets.

EU member states and the European Parliament want to get a deal on the taxonomy by the end of this year but they have plenty of differences that need to be ironed out before then.

After two rounds of closed-door negotiations in the last month, MEPs and national capitals are at loggerheads about how to design the criteria, including key questions like what kind of financial institutions it should apply to and which types of energy sources should be dubbed green or not.

Officials in the negotiations say EU governments want to limit the scope of the rules to include only those avowedly green funds and lenders. Traditional “dirtier” lenders who have no interest in launching sustainable finance products would remain untouched.

But the MEPs want to maximise the scope to include all financial players. “Why should we only create more work for the good guys and let the rest get away with nothing?” says one official.

Perhaps the most sensitive issue of all is how to handle nuclear energy. France — which has big nuclear business interests — doesn’t want the taxonomy to stigmatise nuclear as a “brown” technology. Other member states, led by Germany, want it excluded from being green, as do the MEPs. “This is the stickiest and most sensitive issue — and the one we’ll leave to last,” says one official.

Chart du jour: Spain’s hung parliament

Spain’s far-right Vox party has doubled its seat share in the country’s fourth general election in four years, making it the third largest party and complicating an already fractured political system (see chart above). The socialist party of Prime Minister Pedro Sánchez emerged as overall winner, but with three fewer seats than in the last vote in April.

The other big story is the decimation of the once resurgent centrist Ciudadanos who will have just 10 seats in the 350-seat parliament. FT Europe editor Ben Hall says leader Albert Rivera will face calls to resign after he ruled out joining a Sánchez coalition six months ago.

Any ruling coalition would need to hit the magic 176 for a majority but all roads look tough for Mr Sánchez. Talk of another election is already rife. Follow El País’s English live blog for the best of the action.

Planet Europe

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Romania round one
Sitting president Klaus Iohannis will face former socialist prime minister Viorica Dancila in a run-off as he vies for a second term, according to exit polls. With official results expected on Monday, Mr Iohannis, ex-leader of the conservative National Liberal party, was forecast to have notched a handy lead in Sunday’s first round. The estimates had him on around 39 per cent to Ms Dancila’s 22-22.5 per cent. Dan Barna, leader of the urban intellectual Union to Save Romania party, was forecast to place third. (Romania Insider)

Critical Maas
German foreign minister Heiko Maas has delivered Berlin’s riposte to French President Emmanuel Macron’s trenchant claim that Nato is experiencing “brain death”. Mr Maas warns that we “must not divide the Europeans on security matters” — a nod to the anger and alarm provoked by the French president among Nato’s eastern European members. He also says Paris and Berlin are in talks on the creation of a European Security Council, a development likely to be of some interest to post-Brexit Britain (here’s the speech in full):

“This is not a project to be completed tomorrow, but is a beacon on the horizon. We need such a council to serve as the one venue where Europeans’ foreign and security policy actions are pooled, within the EU’s institutional framework and beyond it.

The UK must be involved, even if it leaves the EU. And Washington must be a key partner. This is the venue in which we can create the nucleus of the future European foreign and security policy that we will need in turbulent times.”

Polish pushback
Meanwhile Poland’s prime minister Mateusz Morawiecki tells the FT’s James Shotter that Mr Macron’s questioning of whether Nato members can still be counted on to defend each other is “dangerous”. He says Macron is in a “different position” from the likes of Poland because “he does not feel the hot breath of the Russian bear on his neck”. The FT’s editorial board calls Mr Macron’s intervention a “wake up call” to rouse Europe from its “complacency”.

Michel’s agenda
Incoming European Council president Charles Michel has become the latest EU big beast to urge the bloc to raise its defence capabilities and foreign policy heft. He chose more diplomatic words than Mr Macron is this interview with the FT, but the underlying fear of the EU being squeezed by other great powers is similar. (FT)

March against Islamophobia
France saw its first mass protests against Islamophobia in Paris and Marseille over the weekend, with anti-racism demonstrators calling out the stigmatisation of Muslims in the country. Le JDD says the Paris march reached 13,500 people. France’s progressive politicians have been divided about the protests. The socialist party refused to take part and two of Mr Macron’s cabinet ministers called it “deplorable” and divisive. (euronews)

Dirty money warriors
Six eurozone finance ministries — France, Germany, the Netherlands, Italy, Spain, and Latvia — have signed up to a call to create a pan-EU authority to deal with the continent’s money-laundering problems. Here’s their non-paper.

We can be heroes: in pics
The New York Times compiles a powerful photo essay of the iconic images from the fall of the Berlin Wall — “an accident of history that changed the world”.

Coming up on Monday
EU foreign affairs ministers meet in Brussels this morning to talk the Gulf and Iran, Venezuela, Sudan, Afghanistan and Turkey.

[email protected]; @mehreenkhn

[email protected]; @mikepeeljourno

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