On December 16, 2019, the EU reached a political agreement on the EU Taxonomy Regulation. This agreement is designed to offer an EU-wide standard for defining sustainable economic activities.
The EU Taxonomy Regulation is a critical component of the EU’s efforts to become carbon neutral by 2050. It is aimed at creating a framework for identifying sustainable investments, thereby providing clearer guidance to investors on investment opportunities that offer long-term sustainability benefits.
This agreement comes as a result of the EU’s recognition of the importance of sustainable investments in achieving its climate and economic goals. By offering a clear definition of sustainable investment, the EU is creating a level playing field for investors, enabling them to make informed and responsible choices while avoiding greenwashing.
The EU taxonomy provides a common language for classifying environmental activities and investments into six areas: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection of healthy ecosystems.
The political agreement on the EU Taxonomy Regulation will now be sent for approval by the European Parliament and the European Council. Once approved, the regulation aims to provide greater clarity and transparency on what constitutes a sustainable investment, thus providing investors with the necessary information to make informed and responsible investment decisions.
The regulation will apply initially to the European Union and will be extended to Member States, to ensure that all Member States adhere to the same classification standards.
In conclusion, the EU Taxonomy Regulation is a crucial step towards the EU’s climate goals. It offers a framework for sustainable investment, thereby providing investors with the necessary information to make informed, responsible, and sustainable investment decisions. This political agreement marks a significant milestone in the EU’s efforts to achieve economic growth in a sustainable manner, and it is hoped that this agreement will lead to a more prosperous, equitable and sustainable future.
