Portfolio Manager Equities
Frans Timmermans made a great fuss at the end of last year about presenting the European Green Deal on behalf of the European Commission: the master plan for turning Europe into a forerunner and booster for sustainability. This would not be done with a pioneering CO2 tax or "green" fiscal measures, but rather with around about €1 billion in cash. This amount is to be used for investment in risky businesses working in the field of sustainability. The notion behind this is that the risk is removed from the investments with these public funds, thus mobilising the private sector for further investment. So is this the way to change course radically? I doubt it.
Let me make it clear that I certainly believe we have to do address climate issues, but the Green Deal seems to amount to money-lending in a saturated market. Private equity players are going to be awash with cash, with €2 trillion at the end of 2018, with everyone in the market on the lookout for returns while large sections of the bond market have negative interest rates. What we can also see is that "green" equities have done exceptionally well in recent times, so you might say there's enough demand for sustainability.
We've even seen lots of investors jumping on the bandwagon of the riskier investments in smaller listed "green" companies recently. This is why I don't think it's necessary for specially devised investment funds, like EU Invest and Invest-NL, to have to facilitate these investments and remove risk in the private sector. It also seems that there's more money heading into a saturated market, so that it's becoming even cheaper to raise capital. This could be overkill in a market where capital is already virtually free.
"I certainly believe we have to address climate issues, but the Green Deal seems to amount to money-lending in a saturated market."
I also wonder whether the Green Deal is really aimed at private citizens. Support is fairly important when it comes to the climate. The cost of insulating homes is a fine example: making a home climate-neutral costs between €30,000 and €60,000. The European Union could, for instance, award grants for this. The total insulation costs? The Dutch Ecconomic Institute for Construction (Economisch Instituut voor de Bouw - EIB) has said that this might cost up to €235 billion for the Netherlands alone. What you'll have in any case is good isolated homes, while the effects of investing in unproven new technologies cannot be predicted with any accuracy in advance (so achieving targets will be just as uncertain!).
So, I ask you: can you agree to the Green Deal? Or do you have some reservations about it as well?