The Sustainable Finance Beirat (SFB), Germany’s sustainable finance advisory group, has proposed to introduce climate-saving plans with a tax benefit to finance the transition to a net-zero economy.
Returns on saving of up to €25,000 invested in sustainable-finance products are exempted from taxes, to draw as many people as possible to sign up for such plans, according to the paper Climate saving for all – a proposal for the government, published by the SFB’s Capital Market Working Group.
The limit set at €25,000 would prevent wealthy people from claiming high tax benefits, opening up the possibility to invest in sustainable products to the wider population, and to those who accrued a smaller amount of savings, it added.
“It is important that we offer citizens different ways to invest. At the same time, [the climate saving plan] would contribute to wealth creation across the broad population holding a high share of savings in investments carrying low interest,” said Michael Dittrich, head of the Capital Market Working Group.
The tax incentives on the climate-saving plan can be reduced in the long term, and ultimately scrapped, when sustainability becomes an established element in investment decisions, it added.
The climate-saving plans have a minimum term of 10 years, but five years for people over the age of 60, according to the paper. Savers can decide to pull out of the plan only in the event of disability or inability to work and, in the case of minors, in the event of death of a parent, according to the SFB.
Banks, insurance companies and investment companies can offer climate-saving plans, in the form of classic savings deposits, bonds with special interest agreements, investment funds and insurance products, it added.
The state creates the legal framework and guidelines to market the products offered by competing providers under one common label, it said.
The SFB proposal follows in the footsteps of the climate saving plan Plan Épargne Avenir Climat (PEAC) in France, which carries tax advantages, but it is open only to young people up to the age of 21.
The state can use the private capital in the saving plans to finance infrastructure for the economic transition, Dittrich added. Private investors can allocate savings to open and closed funds investing in renewable energy, or in corporate green bonds.
However, investments in wind or solar parks require efforts for private investors to identify and assess risks and opportunities, and green bond issuances are often only for institutional investors, the paper added.
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