European Parliament negotiators reached an agreement with Council on Monday on new criteria to determine whether an economic activity is environmentally sustainable.
The so-called taxonomy regulation stipulates that the following environmental objectives should be considered when evaluating how sustainable an economic activity is:
climate change mitigation and adaptation;
sustainable use and protection of water and marine resources;
transition to a circular economy, including waste prevention and increasing the uptake of secondary raw materials;
pollution prevention and control; and
protection and restoration of biodiversity and ecosystems.
The taxonomy for sustainable investment is probably the most important development for finance since accounting. It will be a game changer in the fight against climate change, said lead negotiator for the Environment Committee, Sirpa Pietikainen (EPP, FI). I am satisfied that we reached a balanced agreement with Council, but this is only the beginning. Greening the financial sector is a first step to make investments flow in the right direction, so it serves the transition to a carbon neutral economy, she added.
All financial products which claim to be sustainable will have to prove it following strict and ambitious EU criteria. The compromise also includes a clear mandate for the Commission to start working on defining environmentally harmful activities at a later stage. Phasing out those activities and investments is indeed as important to achieve climate-neutrality as supporting decarbonised activities, said Economic Affairs Committee rapporteur Bas Eickhout (Greens/EFA, NL).
European Parliament