EU spells out criteria for green investment in new ‘taxonomy’ rules
22 April 2021 | Markets
The European Commission on Wednesday (21 April) unveiled a first batch of implementing rules under the EU’s sustainable finance taxonomy, spelling out detailed technical criteria that companies need to comply with in order to win a green investment label in Europe.
The taxonomy rule book introduces a labelling system for investment that could divert hundreds of billions in funds to industries and companies that win a “sustainable” label for all or part of their activities.
It covers 13 sectors, including renewable energy, transport, forestry, manufacturing, buildings, insurance and even the arts, which together account for nearly 80% of EU greenhouse gas emissions, the European Commission said.
A decision on gas and nuclear, the two most controversial aspects of the taxonomy, was delayed and will be dealt with separately.
“The taxonomy describes which economic activities are in line with the Paris Agreement,” and its objective of limiting global warming to 1.5°C, said Vladis Dombrovskis, the European Commission vice-president in charge of the economy.
It will do its part by “helping companies and investors to know whether their investments and activities are really green,” Dombrovskis said.
In short, “it sorts green from greenwash,” he added.
“Today’s new rules are a game changer in finance,” said Mairead McGuiness, the EU’s financial services commissioner, who pointed out that “significant investments are required” to meet the EU’s climate goals.
Indeed, meeting the EU’s 2030 climate goal will require €350 billion of investments every year, according to the Commission. And all companies should be able to contribute, even those that are not yet 100% green, McGuiness said.
“We need all companies to play their part, both those already advanced in greening their activities and those who need to do more to achieve sustainability,” she said in a statement.