On 20 September 2019, millions of people from around the world took to the streets to take part in the biggest climate protest in history. Their message was clear: if we do not act now to reverse the rapid growth in greenhouse gas emissions, the extreme temperatures we have seen in recent years will become increasingly common in the coming decades. This has the potential to turn the Earth into a 'hothouse', which would have severe consequences for the environment, biodiversity, food production, public health, our economy and society. Undeniably, human activity is responsible for all of this. Guido Moavero Milanesi, a policy expert in the European Commission, explains what the European Union is doing to tackle this problem. 

European Green Deal

The EU is at the forefront of the fight against climate change and President-elect of the European Commission Ursula von der Leyen has committed to a new European Green Deal. However, to finance the transition to a greener economy we need to increase sustainable investments in the EU. Public finance alone will not be enough – a substantial part of the funding will have to come from the private sector. To this end, the Commission last year set out an ambitious action plan on financing sustainable growth. The first concrete actions in that plan are already taking shape today.

However, we have to bear in mind that Europe is responsible for ‘only’ approximately 10% of total global greenhouse gas emissions. To reach the target – set out in the Paris Agreement – of limiting global warming to well below 2°C, the remaining 90% will have to be addressed as well. To achieve these goals, we need trillions of euros in annual investment globally in energy, transport, buildings and water infrastructure.

Scaling up sustainable investments

The global nature of financial markets offers a great opportunity to help countries make the transition to a greener economy, by linking local financing needs to global sources of funding. However, this potential is still largely untapped. This is why, on the initiative of Vice President Valdis Dombrovskis, the EU – together with relevant authorities from Argentina, Canada, Chili, China, India, Kenya and Morocco – has launched the International Platform on Sustainable Finance. All the founding members have already started to develop environmentally sustainable finance tools to mobilise their financial sectors.

The ultimate objective of the international platform is to, on a global scale, facilitate the mobilisation of private capital towards environmentally sustainable investments. In practice, this means that the platform will be a forum for members to exchange and disseminate information and to promote best practices in sustainable finance. Members can compare their own initiatives to identify barriers to – and opportunities for – scaling up sustainable finance internationally. They could even strive to align their initiatives and approaches. In this way, the international platform could improve international coordination on sustainable finance matters, while respecting national and regional contexts.

Close cooperation

The International Platform on Sustainable Finance will work in close cooperation with other networks such as the Coalition of Finance Ministers for Climate Action (Coalition) and the Network for Greening the Financial System (NGFS). These three complementary initiatives aim to mobilise both public and private finance towards environmentally sustainable investments, while managing the financial risks related to climate change and environmental degradation.

In addition to the Coalition and the NGFS, key international organisations and financial institutions are also taking part in the international platform. They include the European Bank for Reconstruction and Development, the European Investment Bank, the International Organisation of Securities Commissions, the Organisation for Economic Co-operation and Development, and the United Nations Environment Programme – Finance Initiative. 

Time is running out in the fight against climate change. The consequences of global warming are becoming increasingly evident across the planet. Now is the time to scale up our efforts. The International Platform on Sustainable Finance is a crucial element in the EU’s long-term strategy on climate change. Only through true global cooperation will we be able to hand over a healthy planet to the next generations.

Read more on the EU’s work in the area of green finance