The EU should lead a global effort to develop green banking standards, said Blaise Desbordes, director of sustainable development at Caisse de Dépôts, a French public investment bank, at a conference in Brussels this week.

Desbordes told Members of the European Parliament (MEPs) that if more banks were to have the confidence to invest in sustainable projects, they needed a "stable, harmonious global standard." This norm would allow them to determine whether a project was 'green' and ideally to calculate carbon dioxide (CO2) savings over the life-cycle of a project and even savings in euros, he said.

He said banks or individual member states could take private action and develop their own methodologies, but insisted this was not ideal and urged politicians to take the lead.

Banks have developed guidelines for managing the social and environmental issues related to project financing, notably the Equator Principles, launched in 2003, which are based on policies developed by the International Finance Corporation, the private sector arm of the World Bank. While some 67 banks have signed up to the Principles, they are not universally applied.

Desbordes said a global standard for green banking would help mainstream banks look favourably on sustainable projects as it would be clear that "even if there is a lower return on investment, we save ‘x’ amount of CO2 emissions and even ‘x’ euros."

Guido Agostinelli, senior associate at Good Energies, a global investment fund focusing on renewables and energy efficiency, also argued that EU leaders could do more to safeguard the growth of sustainable investment. "Green markets are growing, but they are clearly fragile and dependent on policy," he said.

He urged the EU to increase public funding for R&D, improve its system of intellectual property protection and ensure conditions were right to attract larger institutional investors, such as the European Investment Bank, to venture capital projects.

The European Commission gave some signs on Wednesday that it was aware of the need for change, promising a "greener" low-carbon economy with the launch its Europe 2020 strategy aimed at driving the EU economy out of the current recession and preparing it for the decade ahead.

A key tenet of this strategy was the need to increase EU R&D spending from below 2% of GDP today to 3% with a significant chunk of this cash being invested in "developing cleaner, low-carbon technologies."

Agostinelli said the 2020 strategy could help trigger private capital effectively, but insisted that EU action plans would only "stand the test of time" if they had clear "political and financial leverage."

Environmentalists questioned whether this was the case. John Hontelez, secretary general of the European Environmental Bureau, said: "The 20% greenhouse gas reduction target, with its wide open loopholes, is not going to trigger real innovation."

Tony Long, director of WWF’s European policy office, said: "We cannot be saddled for the next 10 years with a strategy which is out of date before the ink is even dry."

Luxembourg Green Party MEP Claude Turmes said the EU needed to better define its R&D priorities and ensure funds were only allocated where environmental and social conditions are fulfilled.

Source: environmental-finance.com.