One of the latest initiatives from the EU is a suggestion published on the 21st of April 2021 to reform the way businesses are run in the EU.
According to the EU Commission the core incentive of its Sustainable Finance package is to:
“help improve the flow of money towards sustainable activities across the European Union.
By enabling investors to re-orient investments towards more sustainable technologies and businesses, these measures will be instrumental in making Europe climate neutral by 2050.”
The EU Commission on the core incentive of the Sustainable Finance Package
The Sustainable Finance package:
- aims to clarify which economic activities support the environmental agenda of the EU through the EU Taxonomy Climate Delegated Act.
- will obligate businesses to provide the public with information on sustainability through a Corporate Sustainability Reporting Directive (CSRD).
- will change fiduciary acts to obligate financial firms, advisors and asset managers include sustainability in procedures and advice given to clients
Some people want to go even further and give workers and their unions influence on the way businesses conduct themselves in a future green economy. (link)
The apparent reason is to establish sustainable business management to accommodate the climate challenges now and in the future.
So, who will be paying to finance the EU’s Sustainable Finance package?
It will of course be you and me and we will primarily be paying in 3 ways:
We will be paying as customers
Companies who implement environmentally sustainable strategies will have to finance these changes through higher prices on their products.
We will be paying as investors
Not only will we be increasingly taxed on the return of our stock investments themselves, we will now also be paying through lower returns as the focus of our pension plans shifts from generating higher returns to saving the environment.
We will be paying as retirees
As hinted by the change of fiduciary acts pension funds will be advised – or actively directed by its management – to direct our pension funds into environmental sustainable projects. The question of whether it will make our pension savings grow will be a personal matter to deal with for the individual saver.
In the end this might be just one aspect of an overall pursuit of the EU to end the growth paradigm of our society as we know it.