The ECB sees significant resistance in businesses to invest in the green transition, while the high cost of financing deteriorates the climate. At the same time, an important problem recorded is the so-called ‘greenwashing’ – a trend which ‘names’ investments that do not meet the relevant criteria ‘green’.
Based on the results of a relevant ECB survey, almost 40% of businesses estimate that the lack of investors’ willingness to finance green investments is a very important obstacle while private finance is looking to ESG (Environment, Society and Governance) investments.
A significant financial gap is observed in terms of covering the investments of businesses in Europe which are related to the energy transition and the climate. This fact causes strong concern among the European institutions, which could lead to the immediate issuance of a European green bond.
The issue was discussed at a recent meeting held by the heads of the ECB, the European Investment Bank (EIB) and the International Energy Agency (IEA) with officials from EU member states and representatives of major European companies.
The president of the ECB Christine Lagarde has called for a “Green Capital Markets Union”, which in practice could mean the EU issuing a green bond.
Meanwhile, everyone agrees on the existence of a financial gap, in terms of the amount of investment required by the green transition, amid the special conditions created by climate change.
More and more EU countries sound the alarm to the companies since the financial programs will necessarily go through the pain of the green transition. Besides, the banks are obliged to follow different pricing for “green” and other businesses.
The ECB’s main argument in favor of the green transition is that environmental disasters could lead to price volatility and risks to financial stability. In addition, the results of the stress test for the banks, recorded that a faster green transition would be better for their stability.
