EU law against greenwashing approved by European Parliament
The European Parliament has approved the much debated, and long awaited, Taxonomy Regulation that will determine which financial investments can be labelled environmentally sustainable. Green transport group Transport & Environment (T&E) said the EU green ‘taxonomy’ law will be a cornerstone of sustainable finance that will help channel investments towards a new, clean economy.
Luca Bonaccorsi, director of sustainable finance at T&E, said: “The EU’s green standard will mean people can no longer be sold fake green investments, and money can instead flow to sustainable businesses like electromobility and renewables. It is the most progressive piece of financial legislation in the world.”
The regulation sets the legal framework for the EU’s taxonomy of environmentally sustainable activities to be based on scientific evidence rather than political compromises. It will cover all investments and require financial actors, including fund managers, the issuers of bonds and listed companies, to disclose how green their investments really are.
The next big legislative fight will be to draw up the actual criteria for environmentally sustainable investments. The European Commission will have the final say, but it must do so based on recommendations from a technical expert group. T&E, together with a coalition of 96 NGOs has drawn a list of necessary changes to the recommendations of the technical expert group. Civil society groups, largely absent from the technical expert group, are expected to closely scrutinise this process to ensure that only truly sustainable investments make the cut.
The EU’s climate taxonomies are expected to be subject to a public consultation to be adopted in 2021. The list of sustainable activities will be completed in December 2021 by a newly established body, the Sustainable Finance Platform. Once complete, the taxonomy will be the most advanced and credible standard for green finance in today’s global capital markets.
Luca Bonaccorsi concluded: “Now everyone’s focus will be to make sure the list of environmentally sustainable activities is science based. A swarm of special interests will try to weaken these criteria in the new Sustainable Finance Platform. Hopefully NGOs are allowed to form the backbone of that platform and are not just there for mere tokenism.”
