a. Initiatives which recognise the ethical finance sector

In this class different communications can be found that pick out ethical finance as a central theme, sometimes in declarations of national governments, parliamentary organs (4) or national parliamentary initiatives (5), even if they have not finally been adopted. Often in these documents support is requested for the ethical finance sector and recommendations are given on how to achieve this. The most advanced national example in this category can be found in Italy where in July 2003 the national parliament adopted a resolution which expresses the strong intention to support the ethical finance sector by a law which would give it tax advantages (6). It further demands the commitment of the government to favour the diffusion of ethical finance as a possible additional means of development, to recognise the importance of ethical finance initiatives in the political frame of social and economic inclusion, to encourage the actions of operators of ethical finance and to raise awareness among the public on the experiences of ethical finance as a means to fight poverty.

At European Union level, the European Commission recommended (7) the disclosure of environmental issues in annual reports of companies and the Committee on Employment and Social Affairs of the European Parliament proposed that a directive be passed requiring companies to undertake annual social and environmental reports as well as requiring all European private pension funds to state their ethical policy. However, the attempt to introduce pension disclosure regulations (8) through different parliamentary initiatives has been without success. Disclosure regulations support the ethical finance sector indirectly as they facilitate transparency and help therefore to choose “ethical” actors.

b. Regulations which provide legal support for the ethical finance sector

At this level of legislation states have decided to actively support the sector by providing different favourable legal frameworks. Until now regulations can only be found at national level, not at regional or local level, nor throughout the European Union. Legal support is given indirectly, for example through disclosure regulations for pension funds, life assurance and companies (9) or directly through the provision of tax advantages, “microcredits”(10) or through public labels for green funds (11).

Regulations concerning tax advantages vary with regard to the different kinds of taxes concerned, the amount of tax reduction given, the persons and institutions privileged by the tax incentive and the kinds of investments favoured, for example environmental, social-ethical or cultural. Other criteria include the money’s destination: social enterprises via funds for the social and sustainable economy; different ethical projects or companies (12). The Netherlands – where large pension funds (ABP, PGGM), trade unions (FNV, CNV), rating agencies, research institutes, NGOs and government agencies are the ethical financing driving forces – can be mentioned as the most advanced country in this class. The Netherlands Green Investment Directive,(13) established in 1995, promotes access to finance for environmentally sound or worthwhile projects, for example wind and solar energy, organic farming, environmental projects and sustainable building projects and it frees returns on such investments from income and dividend taxes up to a certain threshold. In 2002 the tax advantage scheme was extended to projects in developing countries (14) and in central and eastern Europe. Since 2004 tax credits have also been given for investments in the social-ethical area and for investments in cultural projects (15).

So far the European Union has not provided any legal support for the ethical finance sector.

c. Commitment of public authorities to the ethical finance sector

The last class comprises local, regional and national regulations, through which public authorities show that they themselves are engaged in the ethical finance sector. Regulations concern decisions of public authorities to review certain public investments with regard to ethics. Examples include:

a regional Flemish public authority which screens pension funds for civil servants (Belgium);
certain local authorities (e.g. Ghent, Belgium) which screen some public investments;
the Norwegian Parliament, which invests the Environmental Fund (formerly the Petroleum Fund) only in companies with high environmental standards;
the Swedish Government, which has awarded mandates to two hedge funds under the condition that they do not invest the money of the state pension fund in companies that have broken certain United Nation conventions. The national initiatives in Norway and Sweden can be seen as an advanced paradigm, particularly because of the high amounts which are invested in a responsible way.

Further examples in this class would be certain local authorities in Germany. Neuss is the first local authority in the world to support the ethical finance sector by being a member of an ethical finance institution. (16) The town pays 1 cent per inhabitant (in total € 1500) and aims to activate the population of Neuss to also invest in ethical finance institutions. The Council of Munich has, after having considered creating an ethical-ecological Munich fund,(17) published a manual (18) which enables the inhabitants to familiarise themselves with the spectrum of ethical-ecological investment facilities in Munich.

Initiatives of commitment in the ethical finance sector at European Union level are not known.

From Esther Petridis, Trends in Social Cohesion n°12, "Ethical, solidarity-based citizen involvement in the economy : a prerequisite for social cohesion", Council of Europe publishing, 2004, pp. 90/94