The European Commission’s recently published green paper on long-term financing for the EU economy is something of a “missed opportunity” with regards to developing a low carbon economy, according to Eurosif, the European Social Investment Forum.
The Brussels-based forum believes the green paper, whose consultation period ended last week, is “not sufficiently aligned” with key policy areas like support for a more competitive low-carbon economy, protecting the environment and developing new green technologies.
Eurosif argues that long-term investing is an asset management philosophy that emphasises patient capital associated with long-term growth of productive assets, “as opposed to short-term pricing of those assets.”
Thus the “type and characteristic” of the assets are not the way to define long-term investing; rather it is the way the assets are managed.
So Eurosif is urging the Commission to address other issues, such as how can investment in long-term productive capital be better aligned with Europe’s social and environmental ambitions?
And how can investors be encouraged (and allowed) to adopt investment horizons that are more closely matched to those of their long-term beneficiaries?
Eurosif wants asset owners, managers and intermediaries to be transparent about their incorporation of ESG concerns for the benefit of investors and savers.And corporate governance legislation “must be revisited” to align corporate behaviour with long-term investor expectation.
A response to the draft has also been made by the Climate Bonds Initiative, which works to mobilize debt capital markets for climate change, and the Network for Sustainable Financial Markets, the organization comprised of financial market professionals and academics.
“Europe’s long-term viability is inextricably linked with becoming a low-carbon economy”
“The long-term viability of the European economy is inextricably linked with a successful transition to becoming a low-carbon economy,” they write in their joint submission.
The groups argue for securitization and long-dated bonds targeted at long-term investors to be considered to help achieve Europe’s stated aim to become a low carbon economy.
Eumedion, the Dutch corporate governance and sustainability forum which represents 69 long-term institutional investors with more than €1trn in combined assets under management, has also called for European bond markets to be developed to boost long-term finance.