Germany to assume a leading role in Sustainable Finance

This is the decision reached by the State Secretaries’ Committee for Sustainable Development at the end of February. It also announced the creation of a Sustainable Finance Advisory Council. Moreover, green and sustainable German Federal Bonds are to be reviewed with respect to their efficiency.

The German Federal Government intends to make Germany a leading financial hub for Sustainable Finance and will develop a strategy to this end. This was agreed in Berlin at the end of February by the State Secretaries’ Committee for Sustainable Development under the auspices of the Head of the Federal Chancellery, Helge Braun. The committee also resolved to establish a Sustainable Finance Advisory Council in order to expand dialogue between the Federal Government and the finance sector, the real economy, civil society and the scientific community. The committee members further ordered that the efficiency of green and sustainable German Federal Bonds be reviewed.

With its Sustainable Finance resolution (PDF), the Federal Government is emphasising the importance of financial market stakeholders to take sustainability aspects into account in their decisions. The committee did not adopt a schedule for the development of a Sustainable Finance strategy. The Federal Ministry of Finance (BMF) and the Federal Ministry for the Environment (BMU) are currently working on a detailed concept to implement the resolution to create an advisory council.

The German Council for Sustainable Development (RNE) has been advocating the incorporation of sustainability into the world of finance for years. As early as in 2006, it spoke of the potential leverage effect that the financial market could have on sustainable development. The Council highlighted the need for ambitious goals to be set with a recommendation statement issued before the committee meeting. In addition, the Council founded the Hub for Sustainable Finance (H4SF) as an open stakeholder platform and will continue organising the established H4SF round table formats until further notice. “The Federal Government’s resolution on Sustainable Finance deserves to be acknowledged as a positive commitment from the government,” says RNE Chairwoman Marlehn Thieme, commenting on the plans. Awareness of this topic within the government has evidently increased considerably, she believes, with the Ministry of Finance having played a crucial part in this development.

RNE Chairwoman calls for “clear signals to the market”

“I firmly believe that Sustainable Finance is already having an impact on industry and the economy, but it needs to become more standard on the market,” says Thieme. She argues that, in the light of Sustainable Development, the future viability of business models needs to be assessed differently than with the conventional evaluation frameworks. The RNE Chairwoman called for clear signals to be sent to the market in asset investment as well as in borrowing: “The review of sustainable German Federal Bonds and the establishment of the new advisory council should lead to a decision this year that gives the market the stimulus it needs.”

The State Secretaries’ Committee for Sustainable Development is the central steering body of Germany’s National Sustainable Development Strategy. All federal ministries are represented in the committee by their state secretaries. In addition to the ministries’ state secretaries, the committee meeting was attended by the following external experts: RNE Chairwoman Marlehn Thieme, Vice-President of the Deutsche Bundesbank Sabine Mauderer, KfW CEO Günther Bräunig, Michael Schmidt, member of the management board at Deka Investment GmbH and member of the European Commission’s High-Level Expert Group on Sustainable Finance, and Kai Whittaker, member of the German Bundestag and member of the Parliamentary Advisory Council on Sustainable Development.