14 - Strengthening Green Finance by Better Integrating the Social Dimensions in the European Union’s Sustainable Finance Laws

Summary

The EU has spearheaded innovative legislation in 2019 to promote the financing of economic activities to tackle climate change. But the social aspects of tackling climate and environmental problems have received inadequate attention in the legislation. This has resulted in inconsistent legal definitions and unelaborated processes to ensure all economic and climate tackling activities are socially sustainable. In many cases climate changing activities have resulted from, or been combined with, breaching social and human rights. Providing opportunities to citizens and communities to (financially) redress environmental problems is important for a just transition. An integrated approach whereby ESG risks and long term impacts are integrated in all banking and investment decision-making should be urgently taken up by the Commission. Building on existing international standards, voluntary codes and expertise in the EU’s social sector would help to meet the existing challenges. Such EU policy should also be integrated in the EU’s international trade and investment treaties that create the competition from financial players outside the EU which might not integrate an ESG approach.