Silke Stremlau, the chair of Germany’s sustainable finance advisory group – Sustainable Finance Beirat (SFB) – expects the government coming out of the February election to continue with plans to create the right conditions to fund the transition to a greener economy.
“I hope that the next government will focus on transition finance and what incentives can be put in place to attack private capital for the transition. Another priority for the next government should be to simplify regulation,” she told IPE.
She added that during the next legislative period it is important “to sharpen the understanding” in politics that there is the need for private investments and private markets investments. Germany needs private capital for investments in a real economy hardly hit by a crisis, and in infrastructure.
The last three years of this legislative period in Germany were marked by a debate on the complexity of European Union regulation, according to Stremlau.
The advisory group had constructive links with ministries at working level with ESG Skala disclosing sustainable features of investment products, with the Sustainability Finance Disclosure Regulation (SFDR), and with the Corporate Sustainability Reporting Directive (CSRD).
“They have listened to our recommendations and brought them to Brussels. We want to continue along this line with the next government,” Stremlau said.
She added: “It is important to create a regulatory framework at EU level that is coherent so that the efforts made for reporting are manageable. It is important for institutional investors also to have transparency on transition plans for companies.”
In the recently published report Funding for tomorrow: How private capital makes the difference for Germany’s transformation, the SFB has listed a series of recommendations to fund the transition to a greener economy.
Such recommendations include setting up a Transformationsfonds (transformation fund) that could potentially also be open to institutional investors, Stremlau said. The SFB has proposed in the report establishing a transformation fund with tax incentives only for private wealthy individuals.
The transformation fund would serve to invest in large projects with the state’s participation, a private-public partnership, Stremlau said.
“It is also important to set up vehicles for institutional investors that can scale up, with larger tickets for investments, with the possibility for investors to join forces to allocate assets in those vehicles, especially to finance infrastructure,” she added.
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