THE NETHERLANDS AND BELGIUM: On June 19, the European Parliament’s Committee on Economic and Monetary Affairs voted on a comprehensive legislative package to reform European banking rules (CRD, CRR, BRRD). Several relevant proposals focused on sustainable banking practices have been approved, being it the first time that sustainability proposals made to the level one pillar one of the binding legal texts in bank regulation. The revision also supports the implementation of the internationally agreed Basel rules, which will align regulators’ requirements to the size and business model of banks.
The Global Alliance for Banking on Values (GABV) and the European Federation of Ethical and Alternative Banks and Financiers (FEBEA) celebrate this milestone and consider it as an excellent step in the reinforcement of values-based banking initiatives and institutions. We are happy to see that the adopted proposals include the obligations for large banks to report on environmental, social and governance risks. This will make large institutions reveal the financial risk of unsustainable assets, which is expected to raise their costs and make them less attractive to investors.
The reform will have a direct triple effect on people, planet and profit. Communities and society will know the implications of their banks’ investments and determine if they align with their principles and values. The expected decline of investments on assets like coal, oil and gas, among others, will benefit nature and the environment. Those factors combined should make values-based sustainable assets more attractive and profitable for financial institutions looking for new investments.
The voted package also included a proposal to make mandatory the exchange of information between bank supervisors and anti-money laundering authorities on money laundering risks. Additionally, supervisory authorities will be empowered to limit loans to shadow banks and tax havens.
In their trialogue negotiations with the EU Commission and Council to finalise the banking laws, the MEPs will consider whether to include climate risk in the list that supervisors use to challenge banks on financial risks. The negotiations are scheduled to begin after the formal announcement in the July plenary session of the European Parliament. An agreement is expected in early 2019 and the new rules would enter into force at the end of 2020.
FEBEA Secretariat E: firstname.lastname@example.org T: +39 049 764 8000 @FEBEAethicalfin
Jasmin Panjeta E: email@example.com T: +31 61 525 4228 #BankingOnValues
FEBEA (European Federation of Ethical and Alternative Banks), is a non-profit organisation founded by European financial institutions in order to develop ethical and sustainable finance in a concrete way. It currently includes 27 members in 15 countries, with around 30.5 billion euros of total assets and 650,000 customers. Learn more at febea.org
GABV (Global Alliance for Banking on Values), is an independent global network of banks that aims to direct finance towards sustainable economic, social, and environmental development. It is composed of 51 members and seven strategic partners, reaching approximately 41 million customers, and investing a total of 110 billion euros. Learn more at gabv.org