EUU, Alm.del - 2017-18 - Bilag 343: Notat samt høringssvar vedr. institutionelle investorers og forvalters forpligtelser i forhold til bæredygtighed

Europaudvalget 2017-18
EUU Alm.del Bilag 343
Offentligt

ERHVERVSMINISTEREN

Response to the Commission's public consultation on Institutional

investors and asset managers' duties regarding sustainability

Thank you for the opportunity to respond to the Commission’s consulta-

tion on Institutional investors and asset managers’ duties regarding sus-

tainability. The financial sector has an important role to play in the efforts

to make our economies greener and more sustainable and thereby foster

sustainable growth. Therefore, Denmark is generally supportive of efforts

to further develop the area of sustainable finance which is a growing sec-

tor in Denmark, in the EU, and globally.

Overall, we have three main considerations with regard to the Commis-

sion’s consultation. Firstly, Denmark supports the work on establishing a

common EU framework with respect to sustainable finance. Secondly, we

encourage the Commission to take previous experiences into account

from e.g. the work of the UN and OECD as well as including all three

ESG factors when addressing sustainable finance. Finally, we continue to

see it as imperative that financial regulation first and foremost addresses

the institutions’ risk profiles and ensure financial stability, and we must

stress that enabling more sustainable investments does not automatically

mean more regulation is needed.

Despite being a growing market, sustainable finance still faces barriers to

reaping its full potential. Some of these current barriers are inadequate or

unavailable data, lack of common methodology for assessments, and

comparability of information. Some Danish financial companies experi-

ence a gap in consistent environmental, social and corporate governance

factors (ESG) metrics which prevents them from exploring the full poten-

tial of the European market for sustainable finance. Therefore, Denmark

would support looking into establishing an EU framework, which could

include e.g. common classifications of sustainable finance or reporting

standards to create comparability across the EU. This would help inves-

tors and intermediaries identify the relevant long-term investments best

suited to their client’s interests, thereby potentially opening up to further

cross-border investments.

ERHVERVSMINISTERIET

Slotsholmsgade 10-12

1216 København K

Tlf.

33 92 33 50

Fax.

33 12 37 78

CVR-nr. 10092485

EAN nr. 5798000026001

[email protected]

www.em.dk

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While the precise scope of the Commission’s proposal is not yet clear, we

note that the current scope of the consultation is focused on ESG factors,

and the debate often revolves around factors of environmental nature. I

believe that all three elements are of equal importance when considering

sustainable finance. We would also encourage considering experiences

from e.g. the work of the UN and OECD, in particular the UN Guiding

Principles on Business and Human Rights (UNGPs), the UN-supported

principles for Responsible Investment (PRI) and the OECD Guidelines

for Multinational Enterprises from 2011, which Denmark, among other

EU Member States, joined in that year. These guidelines address sustain-

ability by encouraging companies to conduct continuous due diligence on

their entire supply chain to avoid adverse impact on matters covered by

OECD and UN guidelines.

Furthermore, ESG-factors have, to some extent, already been incorpo-

rated in several pieces of current financial legislation and structures on

both EU and national level, and the effect of these are still to be seen.

It is key to find a balanced approach to sustainable finance which devel-

ops the market without compromising financial stability, and it is impera-

tive that any action not only takes into account differences and existing

well-functioning initiatives and structures across the EU and in Member

States, but also recent developments in the financial regulatory sphere.

We are open to considering manners to promote sustainable finance, but

the primary goals of specific acts of financial legislation and the overall

goal of financial stability should be respected. In general, we believe that

the development of sustainable finance should be led by private actors

and enabled by public ones.

Financial regulation should first and foremost address the institution’s

risk profile and ensure financial stability as e.g. capital requirements ad-

dressing the risk of losses. It would not be appropriate to promote sustain-

able investments by lowering capital requirement. First, it would risk re-

ducing capital requirements below the appropriate level given the actual

risks. Second, it would distort and incentivize disproportionate risk taking

in sustainable investments. This would contribute to creating vulnerable

banks and thereby financial stability risks which would be counterproduc-

tive in supporting lending to the real economy, including in supporting

sustainable investments. Several steps have been taken since the crisis to

ensure a sound and stable European financial system and these steps

should not be compromised.

To conclude, we look forward to initiatives that, by incorporating sustain-

ability in the duties of institutional investors and asset managers, aim to

enable sustainable investment by these actors. We find it important that

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such initiatives take into consideration the current activities already pro-

moting and ensuring sustainability. Moreover, they should not lead to

disproportionately selective treatment of sustainable finance resulting in

increased risk in investment decisions and to financial institutions.

I remain at your disposal for any comments or questions that you might

have and I am looking forward to a constructive dialogue on how to con-

tinue the work to support sustainable development in the EU.

Yours sincerely,

Brian Mikkelsen