Revolution of the financial industry

According to the new EU Commission head Ursula von der Leyen, the European Union is to become the driving force in climate policy. The goal should be to make the EU climate-neutral by 2050. According to the EU Commission, this requires not only annual investments of at least EUR 180 billion, but also a range of instruments for reallocating capital. The function of the financial industry is exciting: Banks, asset managers and institutional investors will play a decisive role in the realignment of capital flows in favour of sustainable investments. We have summarized for you what foreseeable effects the regulatory agenda will have on you and what measures already affect you today. 

One thing is clear, the topic of "sustainability" is currently receiving more and more attention, both socially and politically. The topic is also currently being intensively discussed on the capital markets. Investing in ecological, social and corporate governance aspects is becoming massively more important. The magic formula here is ESG (Environmental, Social & Governance). This rapid development now receives prominent support from Brussels. With the help of a holistic strategy for financing sustainable growth, the EU Commission wants to anchor sustainability as a permanent and integral component of the European financial market.

Based on the Paris Climate Convention 2015, in which the EU and governments worldwide committed themselves to the goal of a more sustainable economy and society, the course has been set for limiting global warming to significantly less than 2 degrees by 2030 compared to pre-industrial levels. To promote a green and sustainable economy that tackles climate change and resource scarcity, Brussels officials, MEPs and member states are currently rolling out plans for a gold standard for green investment, with the aim of diverting private capital. This will help finance the transition to a more sustainable world. The project, which is highly complex in regulatory terms, has an unassuming name ‒ EU Action Plan to finance sustainable growth ‒ but the implications are revolutionary. The EU wants to be the first supranational regulatory authority to establish rules that oblige banks and institutional investors, such as insurance companies and pension funds, in particular, to take sustainability into account in their investment decisions. This is intended to make the capital market greener and support the Paris climate targets.

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DWS Investment GmbH; Januar 2020
CRC 072942 (01/2020)

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