Taxonomy Regulation adopted
The Luxembourg Stock Exchange is a member of the EU Technical Expert Group (TEG) on Sustainable Finance. The establishment of an EU Taxonomy is one of the group’s recommendations on how to finance a sustainable European economy.
The Taxonomy is a classification tool to help investors, companies, issuers and project promoters navigate the transition to a low-carbon, resilient and resource-efficient economy. It is expected to contribute to the European Green Deal by boosting private sector investment in green and sustainable projects. TEG’s technical report on the EU Taxonomy was published in March 2020.
On 18 June 2020, the European Parliament adopted the Taxonomy Regulation, marking the final step of the adoption process.
The Taxonomy Regulation will help create a classification system for sustainable economic activities. By enabling investors to reorient capital flows towards more sustainable technologies and businesses, this legislation will be instrumental for the EU to become climate neutral by 2050. The Taxonomy allows economic activity to be labelled as environmentally sustainable if it contributes to at least one of the defined objectives without significantly harming any of the others.
The objectives are:
- Climate change mitigation
- Climate change adaptation
- Sustainable use and protection of water and marine resources
- Transition to a circular economy
- Pollution prevention and control
- Protection and restoration of biodiversity and ecosystems
Establishing clear European “green” criteria for investors is key to raising more public and private funding so that the EU can become carbon neutral by 2050. The European Commission estimates that Europe needs around €260 billion per year in extra investment to achieve its 2030 climate and energy targets.
Read the press release from the European Commission