As the countdown to the European Parliament elections in June 2024 begins, we sit down with Emily Ahmed, EU Policy Manager at ShareAction, to discuss the pivotal role of sustainable finance in shaping Europe's economic and social trajectory. We cover the recommendations outlined in the elections manifesto that ShareAction, in collaboration with members of the European Responsible Investment Network (ERIN), has crafted for the incoming EU policymakers on how to finance the future we want for our planet and its people.
How important is this election?
This is not a run-of-the-mill round of voting; it's a pivotal moment in shaping the EU’s direction for the next five years and beyond. With the new Parliament and appointed Commission stepping in from 2024 to 2029, the stakes couldn't be higher. This period will be formative for the achievement of the EU’s 2030 climate goal to reduce greenhouse gas emissions by at least 55% and broader 2050 goals. Pressing environmental and social challenges, often exacerbated by our current profit-driven financial system, are culminating. There's an urgent need for action to keep the EU's targets within reach - including robust legislation to ensure the finance sector is playing its part.
What do you think EU policymakers need to do to address these challenges?
Bold action is essential. We need EU policymakers to ensure that the financial sector becomes a solution rather than a problem. EU Institutions hold considerable weight here - they have the power to shape legislation that reduces the financial sector's exposure to sustainability risks and minimises the negative impact they have on people and the planet.
Incoming policymakers face a monumental task: achieving the 2030 sustainability goals, laying the groundwork for the continued transition to net-zero by 2050, and steering Europe towards a more socially inclusive and prosperous future. It's a make-or-break moment, with the fate of our planet hanging in the balance.
The EU policy team in Brussels has collaborated with other NGOs to develop a manifesto for the next EU Commission. Can you tell us more about that?
Absolutely! We have teamed up with members of the European Responsible Investment Network (ERIN), including organisations like WWF European Policy Office and Finance Watch, to craft a manifesto outlining key recommendations for the next EU Commission. It’s a blueprint for embedding sustainability at the heart of financial regulation.
Among the key objectives, firstly, is accelerating investments to propel Europe towards a zero-carbon, just and inclusive economy. This means putting money into economic activities which are crucial for achieving the transition, such as renewable energy projects and social inclusion efforts, that not only cut carbon emissions but also nurture our environment.
Secondly, we've got to call out greenwashing and social washing for what they are. We need coherent and consistent rules, and minimum criteria, to separate credible sustainability investments from deceptive practices. When financial institutions are held accountable and transparency is the norm, we can trust that our finances are being invested responsibly.
Then there's the investor side of things. We want to set strong standards for investor due diligence and engagement. Investors should be aware of how their money is impacting the planet and its people and use their influence to push for systemic change such as eliminating human rights abuses.
Next up, we've got to make harmful activities less profitable. It's time for financial institutions to fully recognise the risks of investing in unsustainable activities and steer clear of projects that harm our planet. By tightening guidelines and levying higher taxes, we can nudge them towards investments that have a positive impact.
And there is a need to empower consumers with the knowledge they need to make sustainable investment choices. By providing clear guidance and resources, we can make it easier for people to invest in a way that aligns with their values and contributes to a brighter future.
Lastly, it's crucial to boost accountability and sustainability know-how in corporate governance. This is about tying executive pay to sustainability goals and making sure boards have the right expertise to think about how their decisions impact the environment and human rights.
How has the manifesto helped ShareAction's efforts to influence policy?
The manifesto has been our guiding star. It's opened doors to meaningful discussions with European Commission officials involved in preparatory work for the next Commission. Additionally, it has enabled us to develop more granular recommendations in collaboration with E3G and WWF-EU, as showcased in our joint report. Together, we are pushing for tangible change.
With the EU elections on the horizon, what's the key message ShareAction wants to convey to EU policymakers?
Sustainable finance needs to be at the top of the EU agenda. EU policymakers must listen to the needs of the planet and its people in peril and take action to rectify the functioning of the financial sector. The EU elections in June 2024 offer a unique opportunity to chart a course towards a more equitable, resilient, and sustainable future. Let's seize it with both hands!
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