Sustainable finance is an increasingly popular concept. NFU was right on track when we had it as theme for our Nordic conference in 2015. We had already begun to describe our vision of sustainability in the finance sector the year before, when adopting a mission and vision for NFU in 2014. We still work in the same spirit, and as sustainability increasingly is on the agenda of policy makers, it is time for a renewed and deepened effort to influence the direction of this issue.

The European Commission has established a High Level Expert Group (HLEG) on sustainable finance. The first conclusions from the group were published this summer. The group puts forward a report with several ideas on how to proceed with the issue, and makes some concrete recommendations as to where the road ahead should lead.

Much of what the group recommends is excellent. But there is need to complement the proposals with a social perspective. Union and employee factors are not reflected enough.

For example, the group recommends setting up a European classification system for sustainable financial products. The focus of the section is solely on factors contributing to environmental goals. This needs to be complemented by social ones. Investments that help green our economies but undermine free collective bargaining and the freedom of association cannot be called sustainable. Inequality is not sustainable, and wages and working conditions are upheld by strong unions and organised employees. Labour rights factors must be included in future European classification systems.

The group suggests improving disclosure on sustainability issues. Inspiration could be drawn from a recent initiative from ShareAction, a UK-based non-profit organization. Late last year, ShareAction launched the Workforce Disclosure Initiative. Its signatories commit to push for better jobs and uphold labour rights in their investments and supply chains through the use of a survey. Its 40+ pages list many indicators that support wellbeing at work and labour rights. Several financial institutions, among them Nordea, have signed the initiative. It is time for investors to push for real transparency on social and labour issues.

Another excellent proposal from the group is to improve the European Commission’s own impact assessments regarding sustainability factors. The group suggests making the assessment of environmental and social impacts a key requirement when making new legislation and policy. This is something that NFU repeatedly has been asking for in our contacts with the Commission. It is key to develop a more social EU.

Another idea is to step up the European supervisor’s work with environmental, social and governance (ESG) issues. Based on experience, NFU can only agree with this recommendation. The knowledge and awareness of the social impacts of finance and finance legislation has been worryingly low in the European Supervisory Agencies. Fundamental social and societal institutions, such as the right to collective bargaining, has been questioned. This is not a feasible approach for the future. The supervisors should support factors that strengthen the resilience of the European economies, such as disclosure on social impacts and the effects of EU rules and firm’s business models on labour rights and collective bargaining.

NFU’s work with ESG issues and sustainable finance will continue to develop soon, and unions’ contributions to it need to be both thorough and constructive. Inequality is on the rise in many countries, and although the reasons vary, Western economies have in common that where union organisation rates go down, inequality goes up. Sound wages and working conditions upheld through collective bargaining is a key sustainability issue for the future, and the EU’s efforts to encourage sustainable finance should reflect this.

Arvid Ahrin, General Secretary
@ahrinnfu