Sustainable finance – EU Classification System for Green Investments
One of the key policies of the European Commission is to reduce greenhouse gas emissions within the EU in line with the Paris Agreement. One of the initiatives to achieve this aim is the legislative package on Sustainable Finance that the Commission published in May 2018. The main objective of this package is to mobilise finance for sustainable growth by re-orienting investments and capital flows towards more sustainable technologies.
In December 2019 the Commission, the Council, and the European Parliament, one of the key pieces of the package, agreed the Taxonomy Regulation on. The aim of this Regulation is to set a framework to identify which economic activities are environmentally sustainable.
FECCIA is following this file closely, since the chemical, pharmaceutical, rubber and plastics sectors are essential in developing and providing sustainable innovations, processes, and products.
The Taxonomy Regulation requires the Commission to adopt “Delegated Acts”. These acts are to establish the technical screening criteria for determining under which conditions a specific economic activity (including of course processes used on the chemical, pharmaceutical, rubber and plastics industries) is considered to contribute substantially to one or more of the EU’s environmental objectives while not causing significant harm to any of the other EU’s environmental objectives.
Within the framework of the Taxonomy Regulation, the Technical Expert Group (TEG) on sustainable finance, established by the Commission in July 2018, has been asked to develop recommendations for such technical screening criteria. One of the core principles here is that the Commission will be building the “Delegated Acts” on these recommendations of the (TEG).
On 9 March 2020, 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 report is supplemented by a technical annex containing:
- Updated technical screening criteria for 70-climate change mitigation and 68 climate change adaptation activities, including criteria for do no significant harm to other environmental objectives.
- An updated methodology section to support the recommendations on the technical screening criteria.
According to the Commission’s proposed roadmap for a Delegated regulation on “Sustainable finance – EU classification system for green investments”, a legislative proposal of the Delegated Regulation is envisaged to be published in Q4 2020.