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Two business men standing in green office building looking at the sun Looks like a bright future for Germany within the sustainable finance industry | © GettyImages/Ezra Bailey

Sustainable Finance

Germany is currently working on a Sustainable Finance Strategy to become a leading Sustainable Finance center.

A growing number of banks, insurance companies, funds and other financial market players already take sustainability-related factors into account when they make financial decisions. In particular, climate change and its economic effects (for example, caused 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.

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 and the climate targets set by the Paris Agreement of 2015.

To this end, the government established an advisory board – the Sustainable Finance Committee – in 2019 to advise the German government, monitor discussions at the European level, enhance the knowledge base and advance Sustainable Finance in Germany. The body will also pool existing expertise and promote dialogue between relevant market actors.

Sustainable Funding, Investment Banking and Insurance Products

Sustainable Finance is understood as financial market actors taking sustainability factors into account in their decision-making processes. These include among others:

  • A comprehensive understanding of sustainability related risks and opportunities in financing and its translation into risk management systems;
  • Increased transparency to allow a fact-based assessment of sustainability and impact of a funded activity;
  • A long-term decision-making horizon;
  • Access to a broad choice of sustainable investment products for private and institutional investors.

More reading available in the Sustainable Finance-Committee of the German Federal Government Interim Report: The Significance Of Sustainable Finance To The Great Transformation

Germany as a leading Sustainable Finance center

The State Secretaries’ Committee for Sustainable Development has approved fresh efforts to help make Germany a leading center for Sustainable Finance, which the federal government understands as financial market players taking sustainability into account in their decision-making.

See the article about Germany as a "Sustainable Finance" Location (Markets Germany 05/19)

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