This is bad news. But not that bad actually. As explained by Michel Cardona in a policy brief that you’ll find in this newsletter, we should not expect too much from voluntary commitments from private actors anyway. Not only because they are voluntary, but because the committed actors are mostly refinancers of the economy, not primary actors, and their impact on the real economy is more limited than we think. To enable private finance to fully play a role and have a transforming impact, we need to see more action from public authorities and especially from financial regulators.
 
In this regard, the forthcoming vote at the EU Parliament on the Banking Package will be a test for the EU. It is likely that the regulators will ask banks to adopt “transition plans”. But as highlighted in a new study released today by I4CE, the effectiveness of this decision for climate will depend on the content of such plans and what kind of supervision is implemented afterwards. As always, the devil is in the details. And financial regulators must strengthen their game.