Bankers are less ideological than other people
Claude Turmes is in favour of a healthy level of capitalism. Nevertheless, the member of the European Parliament representing the Luxembourg Green Party supports the proposal for a financial transaction tax. In his view, the notion of sustainability includes a regulated financial sector and massive investment into renewable energies. With regard to the outlook for the financial centre, Claude Turmes thinks that a crisis is an opportunity to detect the market niches of the future.
How would you define sustainability?
On the one hand there is the environmental aspect. In a world of scarce resources and overstrained ecosystems it is logical and urgent that a larger proportion of money be invested into projects that help tackle environmental problems. Another aspect is the social component: we have to make sure that the return of financial products is not excessively high which would mean too much pressure on rationalisation and cutting jobs. The third element is regulation. A healthy level of capitalism is only achievable if you set yourself rules, that’s why I am in favour of a regulation of financial products and the introduction of a financial transaction tax.
Don’t you have the impression that the term sustainability is too focused on environmental projects?
Economy and growth are not ends in themselves. It is all about a fair distribution of economic riches without violating the ecological limits of our planet. If this doesn’t happen, then we will deprive ourselves of the foundation on which economies and decent living are possible.
Is sustainability only a fashion?
There is more to it. The market is saturated with mass produced articles, that’s why it is important to know in which fields we want to invest. I can tell you that investment has to be made into renewable energies, transport and gas and power networks.
Can you give us some examples?
The EU-Directive on renewable energies, adopted in December 2008, set a target of minimum 20% market share for renewable energies by 2020. This implies investing some 300 billion euros between now and 2020 into alternative energy sources such as onshore and offshore wind power mills, solar energy, biogas and biomass. Furthermore, energy networks have to be modernised and made more “smart” which will add investments of at least 150 billion euros. Large scale renovation of buildings, which will be a consequence of another piece of legislation on buildings, will require up to 100 billion a year over the next 25-30 years. All these are interesting areas to invest into because these are very stable sectors.
Is it not a paradox that the finance world speaks about sustainability?
Bankers are less ideological than other people. They only care about investment in the future, which is the same political discourse as that of the green party. However, there is not a unique banker profile, just as there is not a unique politician profile. You have the ones who don’t look farther ahead than the next elections and others who think that politics is a noble job and that you have to think long term. The same is true for bankers.
What are your contacts within the banking sector?
I want to get in touch with the people in charge of Luxflag and ask them it if would not be helpful to create a label for renewable energies in order to position the fund industry in this area. My wish is that the Luxembourg financial centre become a private equity centre of excellence for the Grande Région like San Fransciso has become for Silicon Valley. A crisis is also an opportunity for the financial centre to detect the market niches of the future.
How do you see the future of the financial centre?
If we are realistic we recognise that a cold wind is blowing on the international level which brings with it the end of banking secrecy. But we mustn’t forget that we have trump cards too, like being a country where political decisions are taken quickly. It is now important to make a success of the transition from a banking world which is less regulated to one with stronger regulation.
What about ethics?
There is one major problem: we talk a lot about corporate social responsibility but we have no standardised reporting system. That means honest companies will be undercut by those who use CSR as a marketing trick. This is not only true for banks but for the economy as a whole. Therefore progressive economic and financial forces should cooperate with those in politics who want standardised reports. Otherwise we will never control the black sheep and those who jump onto the bandwagon.