BERLIN (Reuters) – The German government is planning a new green financing strategy to direct capital into environmental projects and develop Germany into a leading center for sustainable finance, plans seen by Reuters show.
The so-called Sustainable Finance Strategy Plan lists 26 individual steps and will be adopted by the cabinet on Wednesday with a view to mobilizing investment for climate protection projects.
“The federal government wants to develop Germany into a leading location for sustainable finance,” said the plan, which is in line with the United Nations Sustainable Development Goals.
The plan aims to support the EU to become carbon neutral by 2050 – a target the European Commission estimates will require 350 billion euros to be invested annually.
The plan also responds to investors demanding that more companies comply with environmental, social and governance (ESG) criteria.
To help investors, the German plan envisions a sustainable “traffic light” system that makes it easier to identify green investment opportunities.
Berlin wants to coordinate traffic light plans with the EU if possible, but if it can’t move quickly with the bloc it will start with Germany’s Federal Environment Agency.
The government also plans to increase export credit guarantees and assistance for green projects, and to reallocate € 9 billion in equity held in pension and welfare funds into green investment.
With the Greens now topping most polls, Chancellor Angela Merkel’s conservatives and their Social Democratic coalition partners are eager to laud their green credentials ahead of September’s federal elections.
The government envisions this year’s green bond issuance to be similar to 2020, when it launched its first two green bonds with a combined volume of 11.5 billion euros.
A 30 year green bond is planned for May, with 10 year issuance to follow in the second half of this year.
Written by Paul Carrel; Edited by Cynthia Osterman