Press release – Reclaim Finance

Monday April 6th 2020. 19 Ministers of the eurozone are gathering tomorrow to discuss additional financial measures in response to the Covid crisis. In an open letter to the Eurogroup and ESM Board of Governor, 10 European NGOs call for the Ministers to opt for flexible support, spent in accordance with the European Green Deal and carbon neutrality objectives.

Responding to the crisis, governments and institutions multiply announcements[1] to help the economy and avoid the installation of a lasting crisis. To finance severely hit states, the Eurogroup is studying emergency[2] measures to supplement the first decisions of the European Central Bank and Member States.

Paul Schreiber, campaigner on the supervision of financial actors at Reclaim Finance :

We support additional measures, on top of monetary ones decided by the ECB. But the eurozone has to stand united, help the most vulnerable countries and citizens while supporting the construction of a post-crisis society based on solidarity and sustainability. Stimulus plans already account for more than 2% of global GDP of the eurozone, liquidity measures for more than 13%. In this context, the constitution of a common debt shouldn’t be taboo as long as it aims at “green solidarity”.

If the activation of the European Stability Mechanism (ESM), more precisely its precautionary credit lines, is almost a done deal, complementary tools could be used: a 200 billion guarantee fund at the European Investment Bank (EIB), a 20 billion solidarity fund proposed by the Netherlands or a new fund that would issue common debt for a limited time as put forward by the French government[3].

In an open letter[7], 10 NGOs call the Eurogroup to reinforce interstate solidarity, to not link support to macroeconomic adjustment – that would likely result in austerity later – and to channel this support in accordance with the Green Deal and European climate objectives. 

On March 26th, the Council of Europe stated that: “The urgency is presently on fighting the Coronavirus pandemic and its immediate consequences. We should however start to prepare the measures necessary to get back to a normal functioning of our societies and economies and to sustainable growth, integrating inter alia the green transition and the digital transformation”. Tomorrow, Finance Ministers will have the opportunity to take on this road.

Lucie Pinson, Director of Reclaim Finance :

Conditioning new financial support to the implementation of macroeconomic adjustment programs, and therefore to austerity once the crisis is over, will only weaken our societies resilience against futur sanitary and environmental crises. The amounts necessary to the ecological transition are colossal, hence the need to immediately start aligning economic and financial programs on a 1.5°C trajectory. Fighting the consequences of the Covid pandemic and climate change are compatible, we just need to want it. Tomorrow, Finance Ministers must ensure that unblocken funds are used consistently with the Green Deal and the carbon neutrality objective. It demands that we do not make any blank check to the most polluting companies,but that we condition support to decarbonization objectives of their activities.

[1] Policy Responses to COVID-19 – International Monetary Fund

[2] Coronavirus services sector craters as the EU searches new funding

[3] Netherlands, Austria push for tougher conditions for corona loans

[4] Joint statement of the members of the European Council, 26 March 2020

[5] La Commission Européenne estime que 260 milliards supplémentaires sont nécessaires chaque année pour atteindre la neutralité carbone en 2050, une estimation qui ne prend pas en compte l’écart actuel entre les investissements constatés et les investissements cibles ni le besoin de rehausser l’objectif européen de réduction des gaz à effet de serre fixé pour 2030. Pour la France, d’après le panorama finance-climat de l’I4CE, les investissements devraient augmenter de 15 à 18 milliards par an de 2019 à 2023 et de 32 à 41 milliards de 2024 à 2028.

[6] Liste d’entreprises à exclure des collatéraux et rachats de titres, 25 mars 2020 – Reclaim Finance

[7] NGO Letter to Eurogroup, 6 avril 2020