Contact: Valerie de Liedekerke
Toward delivering on the UN Agenda 2030 Sustainable Development Goals (SDGs) and climate-related goals through the Paris Agreement, the EU and its Member States endorsed an EU Action Plan on Financing Sustainable Growth. The Action Plan sets out a comprehensive strategy to link finance with sustainability. The strategy consists of i) reorienting capital flows towards sustainable investment, ii) mainstreaming sustainability into risk management, and iii) fostering transparency and long-termism in financial and economic activity.
One key action is the EU Taxonomy – an EU-wide classification system framework. The Taxonomy is envisaged to set performance thresholds (referred to as ‘technical screening criteria’) for economic activities which make substantial contribution to environmental objectives and transition to a low-carbon, resilient and resource-efficient economy. This will allow for the creation of a common language standardizing the concept of environmentally sustainable investment across the EU and between Member States. The European Commission’s Technical Expert Group (TEG) on sustainable finance has been working to develop recommendations for the technical screening criteria for economic activities that can substantially contribute to the EU Taxonomy for climate change mitigation and adaptation. As a member of the TEG, WWF provided direct input towards developing the technical screening criteria, the methodology and guidance on implementation and use of the taxonomy.
This past March, the TEG published its Final Report on EU Taxonomy. The report contains recommendations relating to the overarching design of the EU Taxonomy, as well as extensive implementation guidance on how companies and financial institutions can use and disclose against the taxonomy.
The development of the four other environmental objectives: sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention control, and protection and restoration of biodiversity and ecosystems of the EU Taxonomy will take place via a new Platform on Sustainable Finance, which is expected to be operating by this autumn. WWF will again seek to be a contributing member to give input in defining technical screening criteria.
The first company reports and investor disclosures using the EU Taxonomy are due at the start of 2022. Over the next twenty months, the technical specifications of the EU Taxonomy will be adopted by the European Commission through delegated acts.
Taxonomy definition:
According to the report: “A Taxonomy is a classification tool to help investors and companies make informed investment decisions on environmentally friendly economic activities. It can help to grow the clean economy of the future and substantially improve the environmental performance of industries we have today.”
This article is part of the WWF Baltic Newsletter – May 2020
