Going Green: How Malta’s Economy is Embracing Sustainability
In a recent speaking engagement, the Maltese Minister for the Environment, Energy and Enterprise, the Honourable Dr. Miriam Dalli, discussed the crucial role of the financial services sector in Malta’s ongoing transition to a ‘green economy’. Dr. Dalli focused on a staggering EUR 24 billion reportedly laying idle in the form of local bank deposits and stressed that Maltese investors should be encouraged to direct this capital towards sustainable business ventures – such as, for instance, renewable energy projects.
Dr. Dalli’s comments largely reflect her ministry’s increasing efforts over the past months to make sure that sustainability firmly cements its place on the nation’s political agenda. On a macro-level, back in December 2022, the Ministry for the Environment, Energy and Enterprise published Malta’s ambitious Sustainable Development Strategy for 2050, which (amongst other strategic goals) identifies the transition towards a climate neutral, ‘green’ and ‘blue’ economy, as one of the principal drivers for meeting Malta’s international climate commitments. The document emphasises the growing importance of creating a ‘culture’ which prioritises sustainable finance in all of its forms (including in the form of green bonds) and outlines the nation’s pledge to incentivise and support businesses’ sustainable initiatives going forward.
This baseline position adopted by the Maltese government has trickled down to the workings of supervisory authorities such as the Malta Financial Services Authority (MFSA) – the single regulator of all financial services in Malta. Indeed, as part of its supervisory priorities for 2023, the MFSA has clearly identified sustainable finance as a key focus area spanning across a number of industries – including the capital markets, banking, insurance and investment services. In the capital markets space, the MFSA has expressly indicated its commitment to monitor developments with respect to green bonds in particular; this being a growing area of interest given the proliferation of the green bond principles issued by the International Capital Markets Association (ICMA), the up-and-coming European Green Bond Standard (EU GBS), and the as yet untapped potential of the Green Market launched by the Malta Stock Exchange a while back.
Further to the above, in a comprehensive paper issued in Q1 2023, the Malta Financial Services Advisory Council (MFSAC) identified sustainable finance as a key underpinning area for its ten-year strategy for financial services in Malta; noting that a number of potential areas of impact are currently being explored. The paper also singles out FinanceMalta (a non-profit public-private initiative) as responsible for prioritising sustainable finance initiatives – with the identification of potential niche markets for Malta as a jurisdiction underway.
In view of the foregoing, it is safe to say that 2023 and beyond should prove to be quite eventful for practitioners in the sustainable finance space. The time is ripe for stakeholders across the board to come together with the common aim of financing Malta’s green revolution – thereby launching Malta’s offering as a jurisdiction in this exciting area.
Dr. Luke Hili is an associate within the capital markets and insurance teams at Ganado Advocates. For more information on Ganado Advocates’ service offering on an ESG and sustainability front, please refer to: https://ganado.com/legal-areas/sustainability-esg/