European countries should band together to create a “green capital market” to finance the transition to cleaner fuels and other initiatives needed to meet the Paris Agreement climate targets, UBS Group AG Chairman Axel Weber said. 

Weber, speaking on a panel at the European Forum Alpbach in Austria, said Europe’s leading position in tackling pollution should help it create a green-focused capital markets union.

“If we are really not so successful as Europeans to compete with the U.S. capital markets why don’t we take where we are and build the green capital market of the future?” Weber asked.

European businesses rely on bank loans for about 70% of their financing, far more than in the U.S. where companies tap capital markets on a much greater scale.

Weber said the Paris accord’s target of keeping global warming below 2 degrees Celsius is too unambitious and will need an enormous amount of financing that Europe could organize and provide with a linked capital market union. Such a green capital market could have more than a $100 trillion market capitalization, he said.

“What we need to do is get big finance and global firms behind this agenda,” Weber said.

Source: Bloomberg