Government aims to make Germany a leading centre for sustainable finance

The State Secretaries’ Committee for Sustainable Development met on 25 February 2019. The group’s talks placed a special focus on the topic of sustainable finance. The German government understands “sustainable finance” as financial market participants incorporating sustainability-related issues into their decision-making processes. At the meeting, the state secretaries responsible for sustainability policy in their respective ministries were also joined by external experts.

Responding to an initiative put forward by the Finance Ministry and the Environment Ministry in close collaboration with the Economic Affairs Ministry, the State Secretaries’ Committee decided that the German government will develop a sustainable finance strategy. This strategy will aim to make Germany a leading centre for sustainable finance.

The committee also endorsed the following additional steps by the German government:

  • set up a sustainable finance advisory committee to facilitate the German government’s dialogue with representatives from the financial sector, the real economy, civil society and academia;
  • continue exchanging experience on how to ensure sustainable finance in government investment;
  • develop a communication strategy to make consumers and the financial sector more aware of the issue of sustainable finance;
  • review whether it is economically feasible to issue green or sustainable government bonds in Germany as part of the debt refinancing process.

A growing number of banks, insurance companies, funds and other financial market actors already take sustainability-related factors into account when they make financial decisions. In particular, climate change and its economic effects (caused, for example, by floods, storms and droughts, or by the adjustments that are made to ensure a more sustainable economy) also pose new challenges for financial markets. It is in financial market participants’ own financial interests to examine the kinds of risks and opportunities they face as a result. In addition, the State Secretaries’ Committee encouraged financial market participants to adequately consider the effects that their activities can have on people and the environment.

The German government takes the view that sustainable finance should not only improve financial stability but also facilitate the achievement of the United Nations’ 17 Sustainable Development Goals, the objectives of the Addis Ababa Action Agenda, and the climate targets set by the Paris Agreement of 2015. In order to take advantage of the opportunities that sustainable finance can offer Germany as a financial centre, it is crucial now to pool the strengths of the financial sector, the real economy, civil society and academia.

External experts at the February 2019 State Secretaries’ Committee meeting:

Dr Sabine Mauderer (member of the executive board, Deutsche Bundesbank), Dr Günther Bräunig (Chief Executive Officer, KfW Group), Michael Schmidt (member of the board of directors, Deka Investment), Kai Whittaker (member of the German Bundestag, member of the parliamentary advisory council on sustainable development), and Marlehn Thieme (chair of the German Council for Sustainable Development).

Background information:

The State Secretaries’ Committee for Sustainable Development is the main government body responsible for overseeing Germany’s Sustainability Strategy. All government ministries are represented in the committee by a permanent state secretary.