Enabling Sustainable Savings and Investment Channels in Europe: Opportunities and Challenges

Notwithstanding the significant differences between member states, the overexposure to bank deposits as well as the equity underweight in the portfolios of European households represent structural issues in Europe. Both market and regulatory developments should head in the direction of increasing access to suitable retail savings/investment products with comparable cost structures and stable returns in the long run. The onus of financial education should not only be on retail investors, but also on advisers and distributors, i.e. strictly monitored, properly trained professionals, regardless of captive or open distribution models. Multiple stakeholders need to be on board in working towards building and implementing the business-financial-societal case for sustainability. The use of financial regulation as a tool to provide incentives or disincentives for retail/institutional investors should be exercised with great caution and be complemented by other appropriate sectoral policies. This is essential in order to avoid a build-up in asset bubbles and further misallocation of resources. Moving sustainability from a niche segment will require a larger pool of sustainable assets and restoring confidence in the capacity of capital markets to generate long-term value in the real economy.