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Finance

Our vision is a financial system that meets the “triple bottom line” of serving the environment, people and economies. We work towards the alignment of the financial system and financial flows with the Paris Agreement and the EU’s strategy “A Clean Planet for All.” This requires a transformational shift in the way the financial system works and a transition and reallocation of financial flows from brown to green investments by all financial actors: governments, central banks, development finance institutions, commercial banks, pension funds, insurance companies, retail investors, and philanthropy.

 

Paul Fiedler Gqwgfrlosvo Unsplash

Key challenges

Greening the financial system “infrastructure”:

  • Financial sector “infrastructure” (regulation, scenarios, methods, standards, indices) must adjust to fully integrate the impact of climate change.
  • This includes incentivising green investments and penalising brown investments through regulation, developing clear taxonomies, standards and indices, increasing transparency and disclosure, and mainstreaming climate risk in financial analysis.

Shifting and greening financial flows:

  • All financiers must change their behaviour and mobilise new sources of climate finance at scale. National governments need to allocate public finance efficiently and attract private finance, including blended finance. The private sector has significant resources that need to shift from brown to green, facilitated by improved access to data and new financing instruments. Development finance institutions and national promotional banks need to scale up their climate finance ambition.
  • All investors (banks, pension funds, insurance companies) need to commit to green asset allocation targets and align their portfolios to a net-zero economy. Retail investors need access to green investment choices, and philanthropy can help de-risk private investment.

Mission

The ECF Finance programme seeks to contribute to creating a Paris-aligned financial system and transformative climate finance flows by designing well-informed strategies based on political context, economic realities, and comprehensive research. Climate change poses a systemic risk for the stability of a system that should provide the backbone of economic development and social wellbeing.

For this purpose, the programme works across the entire value chain of the financial sector. We assess policy and regulation as much as business models, instruments and products – at national, EU and global level. We work with the entire investment community – public funders, central banks, public financial institutions, commercial banks, pension funds, insurance companies, retail investors and philanthropy – to facilitate their transition out of high-carbon solutions and align their investments with a pathway towards a net-zero economy. Improved clarity as to what is sustainable and what is not and where risks and opportunities lie allows all financiers to take better investment decisions that are aligned with Paris and EU policy targets.

The ECF has helped foster important developments on climate and sustainable finance across the EU. The recommendations from the High-Level Expert Group and the legislative package that was initiated through the EU Action Plan “Financing Sustainable Growth“ can be considered milestones and allow the EU to claim global leadership as long as further progress is ensured in the future. The type of progress we seek is reflected in the decision of the European Investment Bank to phase out its multi-billion-euro financing for fossil fuels.

How we work

The ECF seeks to ensure climate-related financial risks and opportunities are understood and acted upon, grounded in a strategy-based approach. We believe in co-development of projects with our partners, as well as in the empowerment of a civil society community that is able to actively engage in favour of both financial infrastructure and financial flows in line with the Paris Agreement. We collaborate closely with all relevant stakeholders, convene multi-stakeholder initiatives and serve as a bridge between the public and private sectors. As a strategic intermediary, the ECF ensures focus on initiatives that have a truly transformational impact.