Karmenu Vella: Green investments bring back greater returns

Written by Julie Levy-Abegnoli on 17 May 2016 in Interviews
Interviews

Karmenu Vella on why green investments aren't risky business, what to expect from Green Week and why feels the seeds of change have already been planted.

There is no doubt COP21 will be on everyone's mind during this year's edition of Green Week, the EU's flagship conference on environmental policy. 

Perhaps the person with the busiest schedule will be European environment, maritime affairs and fisheries Commissioner Karmenu Vella, one of his native Malta's longest-serving ministers and known as 'Il Guy'. 

The theme of this year's edition is 'investing for a greener future', a topic that directly connects with the Paris protocol, the 2030 sustainable agenda and the EU's very own circular economy plans. 


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To deliver on the commitments made in these agreements, says Vella; "We need to make sure our financial system caters for sustainable development. Investment is a key element in driving the transition towards a greener economy."

This means finding the funds to finance innovative, environmentally friendly projects, the kind "that can be seen as being too risky or too-long term for traditional investors."

Vella explains how the European fund for strategic investments (EFSI) will be valuable in this regard, helping raise private finance, "especially in areas where commercial banking hesitates to get involved." The Maltese official proudly tells this magazine that out of the 54 projects pre-selected by the European Investment Bank, 18 are environmental."

That's not all; "Other tools, such as the natural capital financing facility, are helping raise the profile of investing in natural capital and showcasing the potential of investing in eco-system services, while some member states are leading the way by launching green bonds."

Air pollution, climate change, loss of biodiversity, depleting natural resources; it's often a struggle to imagine a bright future for coming generations. Policymakers make endless speeches, convene all over the world to discuss strategies and make myriad promises, yet it's never quite enough to fi x the state of the world. At times, it feels like we are headed straight for environmental disaster.

Last December's historic Paris agreement seemed to signal a shift for the better, offering a glimmer of hope and providing a renewed sense of urgency and motivation to our decision-makers.

Fostering green investment is crucial, insists Vella, because a thriving economy and a healthy environment go hand-in-hand.

Unfortunately, investors will need a bit more convincing; over the past two decades, only two to three per cent of global investment has come from green investment funds.

Enter Green Week, a chance to talk to, "game-changers from the financial and business sectors to address just that. Our week is set up with a daily theme, each anchoring the role of investment. We will look at cities, the countryside, then the idea of investment in general, then the oceans, and future sustainability. This will give us a broad perspective on the relationship between investment and good environmental standards."

As it turns out, green investments are not just good for the environment, they also make business sense. According to Vella, "The European companies that best weathered the storm of the recession were the ones that embraced environmental concerns and invested in forward-thinking projects."

The numbers are impressive; in the EU, green businesses grew by more than 50 per cent between 2000 and 2011, and jobs in environmental goods and services increased from 2.9 million to 4.3 million between 2000 and 2012. "That's the real story that needs to be told."

The Commissioner adds that adopting more resource efficient practices could bring net savings of €600bn - nearly eight per cent of the annual turnover for businesses in the EU.

Vella says is also focusing on SMEs; "We help SMEs access new markets through dedicated networks for procurement and investments, and with the verification of environmental technologies."

"With the European business awards for the environment, we're also raising awareness about their achievements and recognising pioneers in the field. Of course, financing is crucial too; that's why we are also mobilising various EU funds and taking steps to improve coherence between them."

Environmentally friendly means of production are often believed to be costly and detrimental to profit margins. However, this is not always the case. "Countries with high environmental standards are more competitive than those with poor standards."

"The EU's high environmental standards have been put in place by all member states because of the importance attached to protecting human health and conserving the environment; our future prosperity depends on these elements. They are one reason why our companies are exporting their know-how in green technologies and services all over the world."

Now, says Vella, "We have the chance of doing more with less. By using raw materials and resources more efficiently and being less dependent on imports, businesses in the EU are becoming more competitive and resilient to supply shocks and price fluctuations."

He points out that Europe's commitment to high environmental standards is not limited to the borders of the Union. In fact, all recent EU bilateral trade agreements include provisions that reflect global environmental commitments, on topics such as hazardous waste and chemicals, the conservation and sustainable use of natural resources, biodiversity, forestry and fisheries.

These trade agreements also require parties to commit to avoid lowering environmental standards for the purpose of gaining commercial advantage, he adds.

One of the subjects Green Week participants will discuss is 'investing in our oceans'. When it comes to fisheries, a key challenge is attracting more investment into Europe's seas while also balancing the needs for fish stocks to be sustainable, both in EU waters and outside. 

Vella acknowledges that our continent's seas and coastlines have huge potential, "an enormous wealth in natural resources and human capital." He explains that, under the maritime and fisheries fund, the EU is investing €6.4bn to make its maritime industry a global pioneer of sustainable blue growth.

The Maltese official also says the Commission is working to tackle other challenges facing the sea, such as climate change, overfishing and environmental pollution. He argues that the circular economy has a key role to play here, especially when it comes to plastics pollution. 

"For the first time this year the member states have to develop programmes of measures against marine litter. This can be achieved only through coordinated action at regional level; for this reason we support the development and implementation of regional action plans in oceans and seas around the EU."

Yet what about those fish caught outside of EU waters then imported onto European markets? Vella boasts that Europe's rules combating illegal, unregulated and unreported fishing "are some of the toughest in the world. Only fisheries products that have been certified as legal can access the EU market."

This year's Green Week will open in Ljubljana, Slovenia, the 2016 European green capital. This accolade, along with the European Green Leaf award, "showcases what is possible when a city demonstrates that it has the vision to commit to sustainable development."

Most of us live and work in cities - urban areas are home to two thirds of the EU's population, points out Vella - presenting a huge environmental challenge. 

"As the urban population grows and the impacts of climate change increase, our cities have to adapt. This means planning well in advance, designing changes that reduce the impact of people on the urban environment. That way, people can have a viable and attractive place to live, learn, work and play."

Vella highlights that, "The leading green cities already know how to reduce resource use, improve air quality, mobility and access to green spaces, while progressing towards a circular economy. Investments are made in energy-efficient buildings, clean transport, but also water, waste and green infrastructure." 

"The EU supports cities in making innovative change happen - for example through measures under the EU urban agenda, financed inter alia by the European regional development fund and Horizon 2020."

The circular economy is certainly one of the Commission's flagship projects, although the transition has not exactly been smooth. It was withdrawn from the college's 2015 work programme, only to be reintroduced in the 2016, though many critics claimed the proposals had been watered down. 

Still, insists Vella, "The implementation of the circular economy action plan is on track. Last year, Horizon2020 calls were launched on 'Industry 2020 in the circular economy'. In March, we presented a revised fertilisers regulation, which includes measures to improve market access for organic and bio-waste-based fertilisers in the EU."

"The coming months will see several more initiatives in areas such as green public procurement, eco-design, food waste, plastics, water re-use, chemicals, and innovation. These many steps will, I hope, bring us closer to the new economy we need to ensure long-term prosperity."

"Discussions on the legislative proposals on waste are off to a good start in both the Council and the Parliament. We are looking forward to debating the draft report prepared by Simona Bonafè, MEP in the environment committee in June."

Vella feels that Europe is ready for a green economy, and people are adapting their behaviour accordingly. "The seeds of change are already in place. Europeans want to live well, but many do not want this at any price."

"According to opinion polls, most Europeans are unwilling to exchange damage or destruction to nature in protected areas for economic development. Most of them also agree that social and environmental factors should be as important as economic criteria in measuring progress in their country."

"As the European Commission, we want to reach out and engage with EU citizens, the scientists, the policymakers, the entrepreneurs, the institutions making the argument that investing time and money in greener solutions will bring back greater returns."

"We're working on all these fronts, and Green Week is one example of the type of important campaigns which we hope will reach as many EU citizens as possible."

 

About the author

Julie Levy-Abegnoli is a journalist for the Parliament Magazine

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