The European Parliament has called on pension funds and other financial institutions to commit to divesting fossil fuels and align their investments with the 2°C target of the Paris Agreement.
The plenary session of the Parliament in Strasbourg this week adopted a statement ahead of the UN Climate Change conference (COP23) which takes place in the German city of Bonn from November 6-17.
The adopted text “calls on governments and public and private financial institutions, including banks, pension funds and insurance firms, to make an ambitious commitment to aligning lending and investment practices with the global average temperature target of well below 2 °C”.
And it also wants them to commit to “divesting from fossil fuels, including by phasing out export credits for fossil fuel investments”.
The 751-member parliament also called for “specific public guarantees to promote green investment and labels and offer fiscal advantages for green investment funds and the issuing of green bonds”.
The Parliament is the EU’s co-legislator alongside the member state-level Council. It supervises the work of the Commission, the EU’s executive, and other EU bodies.
Separately the Council has disclosed that it is due to adopt conclusions on the financing aspects of climate change, ahead of Bonn. The issue is due to be discussed at a meeting in Luxembourg on October 10.
It comes as more than 40 Catholic institutions have announced the largest ever faith-based divestment from fossil fuels.
The 14-page Parliament text – adopted by a show of hands – says the commitments under the Paris Agreement to making all financial flows consistent with a pathway towards low GHG emissions means that “the EU must tackle financial flows to fossil fuels and high-carbon infrastructure as a matter of urgency”. The MEPs also stressed that human rights needed to be at the core of climate action.
In terms of energy policy, the document called for the international community to adopt a concrete timetable for phasing out fossil fuel subsidies which “distort competition, discourage international cooperation and hinder innovation”.
In the light of the announced US withdrawal from the climate accord, Europe “must now take the lead in defending the Paris Agreement” to secure the future of its environment and industries.The EU has both the “capacity and the responsibility” to lead by example.
Divesting from fossil fuels and setting an appropriate carbon price were “essential” to create an economic environment conducive to encouraging the public and private investment for sustainable development.
Before it was voted on at the plenary, the text was handled by the Committee on the Environment, Public Health and Food Safety (ENVI) which is chaired by Adina-Ioana Vălean, a Romanian MEP with the Group of the European People’s Party (Christian Democrats).
Vălean, who will head up a Parliamentary delegation to Bonn, told the plenary the resolution would “constitute our mandate for the Bonn conference”.
“Those of us who believe in the science explaining climate change,” she said, “keep on stressing this fact and the associated disastrous consequences for both our present and our future. But we should also act on our beliefs. The Paris Agreement was a major step, but a lot more needs to be done to ensure that this agreement will deliver on its intentions.”
She said the event next month would be a “milestone” in the technical work on the implementing rules for the agreement.
But the “regrettable” decision by the US was already having an impact, namely the suspension of US contributions to the Green Climate Fund, which “will open up substantially a hole which we have all been working hard to fill”.
The European Parliament is currently working on three pieces of legislation to implement the Paris Agreement. They are: the post-2020 carbon market (EU ETS) reform (rapporteur: Julie Girling), the 2030 targets effort-sharing regulation (rapporteur: Gerben-Jan Gerbrandy) and the regulation on greenhouse gas emissions and removals from land-use, land-use change and forestry (rapporteur: Norbert Lins).
Separately, the Institutional Investors Group on Climate Change has written to EU policy makers EU to underscore how upcoming proposals to revise legislation governing CO2 emissions from cars and vans present a unique opportunity to support the development of low carbon technologies.