Germany’s Finance Minister has called in European Insurers to do more to  drive sustainability both internally and with their clients.

Olaf Scholz, (pic) was speaking on the opening day of the European Sustainable Finance Summit. His views were echoed by Germany’s  Environment Minister Svenja Schulze who called on European companies to invest more in sustainable economic activities.

There comments coincided with the publication of the first survey on applying the EU taxonomy that found that just 2% of companies’ activities by revenue meet the taxonomy’s level of ambition for climate action and sustainability. With the recent introduction of Green German Federal Securities, the country’s government has said an ambitious approach can also lead to success.

At the international conference, decision-makers from the world of finance, industry, business, civil society and politics discussed how sustainable growth can be financed at the EU and national level. The digital conference, which is being streamed live online, is taking place across Europe and has been organised by the Green and Sustainable Finance Cluster Germany in Frankfurt.

Mr Scholz, said: “Climate change and protecting the environment are the biggest challenges of our time. These issues can only be tackled effectively if we work together. We have to make sure that money flows where it is needed and increase the relevance of sustainability in financial markets. Banks, insurers and investors have a particular responsibility in this respect, which is why our message is: invest more in sustainability and carbon neutrality! Transforming the economy towards greater sustainability offers huge opportunities. We need to grasp them now.”

Ms Schulze, added: “In the coming years, it will be necessary to make substantial sustainable investments in infrastructure, facilities and technologies, as well as in the reorganisation of processes and in new knowledge. Investment is needed across all sectors, from energy and transport and the circular economy to water management and agriculture and will have to be implemented on a global scale.

“Since the economy cannot be modernised without first being financed, the financial sector is a good barometer for the progress that is urgently needed. With the EU’s Green Deal, we have a European growth strategy with which we are not only protecting our environment and natural resources but also strengthening Europe’s economy, our innovative potential and our competitiveness. However, the European Sustainable Finance Survey shows that big companies still have a long way to go when it comes to achieving climate neutrality.”

She added Germany is committed to the Paris Agreement and the UN’s Sustainable Development Goals and works towards stability in the financial system. The German government therefore also supports the European Sustainable Finance Agenda and has established the Sustainable Finance Committee in Germany.

The state-owned KfW Banking Group is one of the biggest promotional banks worldwide and incorporates sustainability criteria into its activities. By issuing green bonds and establishing the associated reporting system, Germany is improving transparency on green spending in the federal budget and strengthening its position as a centre for sustainable finance.

The results of the first European Sustainable Finance Survey, carried out by adelphi and ISS ESG, have been published, with the plan that it will be carried out in an annual basis.

The survey of around 400 of the biggest publicly listed companies in Europe found, that with regard to companies listed in the Euro Stoxx 50, currently 20 percent  of companies’ activities by revenue are taxonomy-relevant but only 2 percent of activities are taxonomy-compliant.

It added this discrepancy results above all from the fact that the economic activities on which the revenue is based do not yet meet the level of ambition of the taxonomy (which is still in development) regarding climate action.

Deutsche Bank CEO Christian Sewing warned that banks that are not participating actively in green finance stand to lose revenue. “You need to jump on this one,” he told the conference, adding that ratings for environmental, social and governance factors (ESG) would soon become as important as conventional credit ratings.

Mr Sewing added “European banks have a fantastic chance” to become global sustainability leaders by financing the continent’s transformation into a climate-neutral economy, yet also cautioned that the shift towards green finance would have to be gradual, as a sudden end to financing activities not deemed environmentally sustainable would gravely hurt the economy.

A survey conducted by the Association of German Banks found that 89 percent expect “palpable” or even “grave consequences” from the climate crisis, and about half already use voluntary sustainability standards to prepare their workflows for tighter regulations. But they are also eager to avoid tighter national regulations as part of Germany’s drive to become the leading location for a sustainable financial system, and hope for a comprehensive EU rulebook.