Our former analyst, Soline Ralite, was featured in Responsible Investor’s series, ‘The EU Action Plan: What Matters To Me’
Since it was first proposed by the European Commission’s Vice-President for the Euro and Social Dialogue Valdis Dombrovskis, the idea of introducing a Green Supporting Factor (GSF) under capital requirement frameworks has provoked a wide range of reactions in the financial sphere. While the supporters of the GSF argue that adjusting capital requirements for ‘green assets’ would incentivise banks to lend to ‘green’ activities, the idea has been met with significant criticism from academia, financial supervisors, and civil society organisations.
As opposed to a GSF, introducing a supporting factor on SILs could satisfy both the objective of using capital requirements for risk reduction and the objective of shifting capital towards improving the sustainability outcomes
