Chapter VI
accountability, that there are also some references to definitions that are sometimes not legally defined. And this is why you have different interpretations.”
Zoé van Hamme (2022) from the financial industry group also stated that they experienced issues with the current workings of the policy mix. She stated:
“At EU level, all the institutions are working in silos, so, unfortunately, there are a lot of overlaps between existing regulations. The sustainable finance regulations are not (all) already in force, and we are already facing some difficulties such as the lack of data, the fragmentation of the application timeline.”
For these reasons, they voted for ‘no further policy action is needed’ in the 2020 consultation because “for us, the need is to focus on what already exists and do it correctly, before adding additional layers of regulation.”
During opening remarks made in a public event and admitted in the interview for this thesis, Paulina Dejmek-Hack admitted that “there is a certain level of complexity here” (Afore Consulting 2022: 9:20). The EC could have made a strategic mistake by designing a policy mix that is so complicated and therefore generated negative feedback from the business sector.
Alternative explanation: Political Choice
Moreover, Frédéric Hache (2022) stated how he believes that “it is a political choice” of EU policymakers to design an ineffective strategy. This could potentially explain why the EC policymakers decided to follow path dependence and the subsequent pattern of conversion as opposed to a more rigorous instrument design. However, this explanation serves as an alternative to the framework proposed in this paper since it is also only mentioned by one respondent and the empirical findings did not present sufficient evidence to support this over the other findings.
According to Frédéric Hache (2022), governments have known about global warming since the 1970s but have continuously chosen to not act on it. The sustainable finance strategy is just another example of this political choice for inaction. In support of his statement regarding dominant business sector lobbying and institutional lock-in dynamics, he argued that the failure to address climate change (and thus initiatives like the EU sustainable finance strategy) is not a question of lack of solutions or lack of awareness, it is that: “Member State governments are still focused on their reelection and economic growth.”
Frédéric Hache (2022) stated that “In the end, the EC is a mere reflection of its most powerful Member States, and currently the French and German governments are not the
greenest governments.” Therefore, the EC is not incentivized to act most effectively. Frédéric Hache additionally stated that it is his view that the EC thinks:
“If we decide to act on climate change for real, it will most likely mean a recession and most likely will make the [incumbent] government quite unpopular and it will then not be reelected. Or we decide to do pretty much nothing, or just on the margin, knowing full well what it means in terms of hundreds of millions of climate migrants and billions of damage by this century and my understanding of the, you know, not looking at the specifics, but that's the measure that they proposed. I mean, we keep on pushing tools in a fairly repeatedly, but there is no justification. And so these people are not stupid. So the only logical explanation for me is that we're choosing the second option, but we just cannot admit it.”
Frédéric Hache’s (2022) belief that thus that EC policymakers know that actual effective climate action will likely lead to a recession and make the government unpopular. Therefore, they continue to forward a narrative that looks grand; one that holds that the status quo of economic growth can go hand in hand with combatting climate change. Meanwhile, that is a misleading narrative and induces greenwashing. An example that he provided of this political choice for inaction was that of a conversation with a UK Senior Financial Services Agency official:
“So I was at this cocktail with the financial agencies of all the Member States, where I spoke to the UK Senior Financial Services Agency, and I told him exactly that. And he said: ‘Oh, yeah, sure.’ Like I said the most normal thing in the world. And then I had the exact same conversation with a guy who is the head of a lobbying firm close to the Commission here. And the guy told me, he said: Look, it's pointless to do anything about climate change in Europe. It would destroy our competitiveness and benefit the Chinese.
So in any event, we know that all the coal will die. The good news is it will rid us of Islam. Do you want another coffee? And that's just what I mean, people underestimate the cynicism. You know, everybody knows this is bullshit.”
Discussion
The findings of this paper provide some additional nuances to the underlying motivations of stakeholders. First, both business stakeholders and policymakers have confirmed that the instruments of the mix are complex and may be difficult to implement. This explains why the business lobby has worked against the EC’s ambition for additional major policy actions. This is because they want the current instruments to work and be understood correctly first before policymakers add new regulations. This is an additional explanation for their motivation to exert influence on the policymaking of the mix.
Second, an alternative explanation that explains why the incongruence may exist is one based on the idea that EU policymakers simply do not have the ambition to enact a sustainable (finance) transition. Their focus on reelection, favorable public opinion, and economic growth prevent them from implementing what they know will be the only effective legislative efforts.
Although this argument of deliberate inaction is a legitimate concern given the evident and long-standing gap between scientific evidence and policy actions on climate change and environmental destruction, this research did not find sufficient proof that confirms it as a full part of this thesis’ proposed framework. Yet, it is a worthy alternative explanation.
Furthermore, the empirical findings of this paper do reject proposition 3 as it does not appear that the EC on purpose designed the Sustainable Finance Strategy policy mix to activate actors that would otherwise not want to participate.