Annual EFTA ECOFIN meeting focuses on sustainable finance

From left: Markus Biedermann, Ueli Maurer (Chair), Siv Jensen, Bjarni Benediktsson and Henri Gétaz.

The EFTA countries were represented by Ueli Maurer (Chair), President of the Swiss Confederation and Head of Federal Department of Finance; Bjarni Benediktsson, Icelandic Minister of Finance and Economic Affairs; Siv Jensen, Norwegian Minister of Finance; and Markus Biedermann, Secretary General of the Liechtenstein Ministry of Finance. On the EU side, Ecofin was chaired by Mika Lintilä, Minister for Finance of Finland.

“The EFTA States expect growth rates between 1.7% up to 2.6% for 2020 and the employment situation in the EFTA countries to remain in a healthy state,” Ueli Maurer said on behalf of the EFTA States.

 “Challenges like climate change or the implementation of the Agenda 2030, as well as the Paris agreement, have to be tackled jointly by the community of States. In addressing these challenges, the financial sector can play an important role, be it through better diversification of risks or through improved risk management. To this end, appropriate corporate disclosure of risks and exposures is key,” he said.

Furthermore, he highlighted that these challenges must be tackled jointly by EFTA and the EU. The EFTA States recognise the effort the EU has made in the field of sustainable finance, and particularly welcome the EU action plan on financing sustainable growth, as well as the launch of the International Platform on Sustainable Finance, as an important step to global cooperation.

The challenges posed by climate change have a global dimension, which is true equally for the financial markets with their global reach. Environmental risks can translate into new vulnerabilities in the financial system, which in turn might have implications for economic development.

On the occasion of this annual meeting, the EFTA States issued a common paper titled “Sustainable finance”, which touches upon this particular issue: “In general, financial risks stemming from climate change need to be better understood and should be addressed in close exchange with the private sector,” the paper explains, highlighting that sectorial cooperation is another necessity.

Furthermore, the paper notes that within the EFTA States, different approaches are used to promote sustainable finance:

• In Iceland, nearly 90% of the total primary energy supply is from renewable resources. Therefore, climate mitigation actions focus on reducing emissions from transport and fisheries, as the government aims for carbon neutrality by 2040. 
• Through the Liechtenstein Initiative, the Liechtenstein Government among others wants to combat modern slavery and human trafficking through the elaboration of measures that place the global financial sector at the centre of the global effort. Furthermore, the Liechtenstein Bankers Association is currently conducting a comprehensive sustainability review to identify potential opportunities and risks.
• The Norwegian Government appointed a commission to address the significance of climate-related risk factors for the Norwegian economy, including for financial stability. Its report of 2018 highlighted the key role of the financial industry in private sector climate risk management, but still calls for more in-depth analysis.
• In Switzerland, the Government has mandated a working group to review the framework conditions with regard to sustainable finance activities, while taking due account of ongoing developments of the EU action plan and supporting market-driven initiatives. Further, the Federal Council decided in October 2019 to join and participate in the Coalition of Finance Ministers for Climate Action launched by Chile and Finland.

Read the full EFTA common paper.

Read the speech of Prime Minister Maurer.

Find high resolution photos from the meeting here.