After ‘HLEG’: EU banks, climate change abatement and the precautionary principle

The EU is making progress in reducing its carbon footprint. The creation of a High-Level Group on Sustainable Finance has supplemented recent market-led initiatives and provided some recommendations for future reform. This article argues that more remains to be achieved. In particular, in light of the fundamental structural uncertainties attached to climate change, precautionary approaches to the funding of GHG-intensive industries are worth contemplating. Such measures include raising the capital requirements on assets with ‘brown’ credentials. The high dependence on banks for external financing in the EU makes these reforms particularly appropriate for implementation within the bloc.