Gramegna calls for faster green transition in EU meeting

Mairead McGuinness, European Commissioner for Financial Services, Financial Stability and Capital Markets Union, made a stop in Luxembourg during her European tour and sat down with Pierre Gramegna. Photo: European Union

Mairead McGuinness, European Commissioner for Financial Services, Financial Stability and Capital Markets Union, made a stop in Luxembourg during her European tour and sat down with Pierre Gramegna. Photo: European Union

European commissioner Mairead McGuiness and the finance minister Pierre Gramegna touched on the single market for capital and the development of sustainable finance during a meeting in Luxembourg on Monday.

McGuinness is, in a way, the commissioner of the Luxembourg financial centre. It is under her authority that important reforms are being carried out, such as the development of the banking union and the single market, the reform of the anti-money laundering directive with the creation of a European anti-money laundering agency, as well as the reform of the insurance directive (ACA) and the forthcoming regulation of fintechs and crypto-currencies.

The Irish commissioner was in Luxembourg to discuss all these topics. Perhaps not on home turf, but at least in front of a partner whose European commitment and sense of compromise made it possible to make progress on a number of subjects.

Maintaining links with London

True to his principles, the finance minister insisted on the need to deepen the single capital market--“an indispensable point for mobilising the capital needed to finance strong and sustainable growth”--and to maintain links with London despite the Brexit.

Luxembourg and London have often had converging views on financial regulation, and Brexit has seen Luxembourg lose a key ally in Brussels.

Even at the height of the wave of financial players leaving the English capital, Luxembourg never positioned itself as an opportunistic financial centre and insisted on the need to not cut ties. This is what Gramegna (DP) did again on the occasion of McGuinness’ visit, while the “equivalence” dossier is stalling. He also insisted that it is fundamental to keep good relations with important partners and that, without granting London full access to the European financial services market, “which they had as a member of the club”, it is necessary to capitalise on the fact that regulations are still very close. “Not doing so would run the risk of London moving away from the continent,” the minister said.

The finance minister welcomed the fact that the issue of delegated management in the investment fund sector is not as strictly regulated as before. Delegated management activities are often carried out from London.

Echoing Gramegna, McGuinness recognised the importance of finding the right formula in the new relationship with London and indicated that the negotiations on equivalence “are taking place in a constructive atmosphere.”

Opposition to nuclear power reaffirmed

Gramegna also insisted on the need to go even further in terms of sustainable finance. For him, the dual transition facing the EU--namely the digital transition and the green transition linked to climate change--must be accompanied by a transition towards sustainable finance, the “third side of the triangle” as he put it. “If we don't make portfolios greener and without a taxonomy to avoid green washing, we won't be able to achieve the other two priorities,” said Gramegna.

Taxonomy is the political issue of the moment in Brussels, with the central question being whether fossil gas and nuclear power should be considered “sustainable” energy. In the face of the current deadlock, the European Commission took the initiative at the beginning of the week. The list of sustainable investments will be drawn up directly by commission President Ursula Von der Leyen via a delegated act. And it seems that gas and nuclear power will be included in this list as a “transition” activity.

While EU member states are deeply divided on the issue, Gramegna reiterated Luxembourg’s position stating that “gas and nuclear are not sustainable energy sources and should therefore not be included in the taxonomy.” Commissioner McGuiness took note of that statement.

However, Gramegna acknowledged that the energy transition will not be an easy issue and that managers will need time to make their portfolios greener while industry will also take a while to adapt.

This story was first published in French on Paperjam. It has been translated and edited for Delano.