EU Taxonomy Technical Expert Group on Sustainable Finance
The taxonomy is a tool, an extremely useful TOOL A “dictionary - style” tool A measuring tool A transition tool Provides clarity on what is an environmentally Measures the degree of sustainability of an Helps investors and companies to plan and sustainable activity and under which investment and of companies’ activities Allows report on the transition. It sets the objectives circumstances. consistent reporting, “apples to apples” and the direction of travel for different Ends fears of greenwashing Provides the market accounting and comparability: economic activities. and the public with the necessary confidence An Engagement tool Ultimately, it helps raise the A policy tool investments we need to build a A dynamic tool net zero, resilient and It is consistent with EU environmental Like EU ETS carbon markets and EU sector objectives and the goals of the Paris environmentally sustainable policies, it will be updated and revised periodically Agreement. It helps making informed economy. (approx. 5 years) as science, technology, market decisions, developing more effective policies dynamics and policy needs evolve. for professional investors only
Companies’ disclosures For non-financial companies, the disclosure must include: Taxonomy Regulation introduces a new All companies subject to this requirement will disclosure requirement for companies already include a description of how, and to what required to provide a non-financial statement extent, their activities are associated with under the Non-Financial Reporting Directive. Taxonomy-eligible activities. The proportion of turnover aligned with the taxonomy; and Capex and if relevant, opex aligned with taxonomy. By 1 June 2021, the European Commission will This disclosure should be made as part of adopt a delegated act specifying how these the non-financial statement, which may be TEG recommends companies to obligations should be applied in practice. The located in annual reporting or in a disclose breakdown by environmental delegated act will consider the differences between dedicated sustainability report. objective, and % on transitioning and non-financial and financial companies. First enabling activities. disclosures are due in the course of 2022.
Guidance to non-financial companies
Guidance to non-financial companies
Debt and lending-related products: the big winners Aluminium company Asks for green loan or If reduction objectives meet Bank will demand Not compliant to issue a green bond taxonomy thresholds, the loan or necessary data (tCO2/t > 2.9 ) to reduce carbon bond can be marketed as taxonomy intensity of its facility compliant Green loans securitised Bank sells to investors who Project to reduce emissions is Revenues from installation Fund, or have to report on their green successful become taxonomy-compliant EU Green Bond Standard shares of taxonomy-compliant investments
Financial market participants’ disclosures Investors’ disclosures: How and to what extent the investments underlying the financial product are invested in environmentally sustainable economic activities. To what environmental objective(s) the investments contribute; and the proportion of underlying investments that are taxonomy eligible, expressed as a percentage. This should specify the breakdown between activities considered to be “enabling” and “transition”.
Example on an utility company
Guidance to financial market participants
DNSH and minimum safeguards
EU Taxonomy The Platform on Sustainable The taxonomy expands the The greatest opportunities lie Finance investment universe as it includes in debt and lending-related transitioning activities e.g. aluminium products that allow to ring-fence or cement; and encourage companies funding such as green bonds, to truly transition by facilitating them loans or mortgages access to finance Expand Climate Taxonomy by end 2020 The Taxonomy is a tool that will Taxonomy will be the base be perfectioned over time, but for the coming Ecolabel, the EU Examine other ultimately it will help us all raise Green Bond Standard and for environmental objectives the additional investments we standards and labels at national by end 2021 need to address the climate and level set on green investments ecological challenge we face.
Recommend
More recommend
