MNI BRIEF: Interest Rates Barrier To Green Investment - Survey
ECB poll finds most Euro firms investing in climate transition, but high cost of finance an issue despite easier green credit conditions
More than half of euro area firms surveyed by the ECB between May and June this year said high interest rates or financing costs and insufficient public subsidies are “very important” obstacles to securing climate-related investment, despite banks reporting an easing of credit standards and conditions for new loans to green firms, a paper published as part of the latest ECB Economic Bulletin found (see MNI INTERVIEW: ECB To Fine Banks Missing Climate Goals - Elderson).
Transition risks related to stricter climate standards were “very important” to 60% of firms, with larger firms in particular concerned about stricter climate standards, regulation and carbon pricing. Around 40% of respondents were “very concerned” about natural hazards and just under half were equally worried about environmental degradation.
Most companies polled had sufficiently invested or plan to address climate change within the next five years. Transition risk from stricter climate standards proved a greater source of concern for larger firms than for SMEs, and a stronger incentive for mitigation investment than natural hazards or environment degradation.