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Climate 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 enabling a timely transition and reallocation of financial flows from “unsustainable” to “green“ investments by all financial actors: governments, central banks, development finance institutions, commercial banks, pension funds, insurance companies, retail investors, financial service providers, and philanthropy.

 

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Key challenges

Greening the financial system “infrastructure”:

  • Financial sector infrastructure (such as data, scenarios, methods, standards, regulations) must adjust to fully integrate the risks and impact of climate change.
  • This includes incentivising green investments and penalizing unsustainable investments through regulation, developing clear taxonomies, ratings, and indices, increasing transparency and disclosure, and mainstreaming climate risk and impact considerations in financial analysis and decision making.
  • 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. Also, development finance institutions and national promotional banks need to scale up their climate finance ambition. The private sector has significant resources that need to shift capital as well as socioeconomic pathways from unsustainable to truly net-zero-aligned practices, facilitated by improved access to data, analytics, and innovative financing instruments.
  • All investors (e.g asset owners and managers, banks, pension funds, insurance companies) need to commit to green asset allocation targets and align their portfolios to a net-zero economy. Institutional and retail investors need access to green investment choices, and philanthropy can help de-risk and catalyze private climate impact investments.

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 the national, EU and global levels. We work with the entire investment community – public funders, central banks, private and public financial institutions, asset owners and managers, pension funds and their beneficiaries, insurance companies, retail investors, service providers, scientists, and philanthropy – to facilitate their net-zero transition. 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 correspond to the Paris Agreement and EU policy objectives.

The ECF is continuously helping to foster important developments on climate and sustainable finance, particularly across the EU. The recommendations by the High-Level Expert Group on Sustainable Finance and the legislative package initiated through the EU Action Plan on Financing Sustainable Growth can be considered milestones. Both allow the EU to claim global leadership as long as further progress is ensured in the future with the ambitious implementation of the renewed EU Strategy on Financing the Transition to a Sustainable Economy. 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 Finance Programme is set to ensure that climate-related financial risks, impacts, and opportunities are understood and acted upon, grounded in an evidence-based approach to strategy and implementation. We believe in the 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 and the net-zero objective. We collaborate closely with all relevant stakeholders, convene, incubate, and serve as a bridge between the public and private sectors. As a strategic intermediary, the ECF Finance Programme is focussing on initiatives that have a truly transformational impact.

Contacts

Rachel Owens

Director

Chendan Yan

Senior Associate