While the absolute number of climate change legislations appear to be on the decline, in Europe at least, policy makers’ focus on sustainable investment is seeing increased momentum. Over the last few months, four linked policies have been proposed as part of the ongoing action plan on financing sustainable growth by the European Commission, largely based on the findings of the High-level Expert group (HLEG) on Sustainable Finance.
One item on this plan is a detailed EU classification system – or taxonomy – for sustainable activities, creating a common language for all actors in the financial system. In the first instance, the EU’s plans call for a focus on climate change, expanding to other aspects of sustainability in later stages. The HLEG working group included a draft on what the taxonomy could look like – while the actual proposal is unknown, that draft provides a guide to the working group’s initial perspective.