Taxonomy will allow investors to focus their investments on more sustainable technologies and businesses. It will be essential for the EU to become climate neutral by 2050 and achieve the 2030 Paris Agreement targets. These include a 40% reduction in greenhouse gas emissions, for which the Commission estimates that the EU needs to fill an investment gap of around EUR 180 billion per year. In March 2018, the Commission presented the action plan for financing sustainable growth. Action 1 of the action plan calls for the establishment of a Community classification system for sustainable activities, i.e. an EU taxonomy. The European Commission implemented this measure in May 2018 with a proposed regulation establishing a framework to facilitate sustainable investment (taxonomy regulation). [i] This delegated bill, which will be adopted by the end of the year (it is now open for a 30-day consultation), is the part of the derivative law needed to establish the EU classification system for sustainable activities – the EU taxonomy. It follows the political agreement reached on 18 December 2019 on the taxonomy regulation. Once adopted, it will close the first action of the European Commission`s Action Plan for Sustainable Financing, which aims to lay the foundations for a reallocation of capital towards a sustainable economy.
To be considered environmentally sustainable, economic activities must meet the following requirements: the Commission is assisted by a group of technical experts, the “platform for sustainable financing”, responsible for providing advice on the development and revision of the technical screening criteria, as well as on verifying their usefulness. It will also advise the Commission on the need to achieve other objectives and analyse its effects on the potential costs and benefits of their application. In addition, the Commission will be advised by a group of experts made up of experts from the Member States on the adequacy of the technical screening criteria and on the Commission`s approach to these criteria. Theme “Sustainability” Sustainable Financing Sustainable Financing (taxonomy) Recent content “The non-vote of public and private spending on the EU`s climate targets would create risks for the future, including the need for further rescue operations. We must ensure that the money spent today is not wasted, but is subject to clear control to ensure that public funds do not support activities that undermine the objectives of the Green Agreement. The EU must agree on sustainable financial management, based on sound environmental criteria and can be applied consistently to all investments in the EU budget and in recovery instruments. The EU taxonomy is a tool to help investors understand whether an economic activity is environmentally sustainable. Legislative proposal – linking financial sector players in all sectors, Karl Haeusgen, president of the Association of Machinery Manufacturers (VDMA), approved the objectives and principles of sustainable financing. Financial market participants can be expected to take a closer look at the activities in which they finance and invest. In the face of this new regulation, it was easier to hide investments that were unfavourable to the climate. This is no longer an option and the need, for example, to reveal massive assets and carbon indicators will hardly be tempting to invest sustainably.
But he said there was “a way to determine the details of taxonomy and define what a sustainable technology or a sustainable product is across the value chain.”