EU Parliament and Commission Agree on EU Taxonomy

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Stockholm (NordSIP) – At the end of the first week of December, the European Commission and the European Parliament reached a compromise on the EU taxonomy describing green economic activities.

The preliminary deal represents an important step in the progress of the EU’s Sustainable Finance legislative package, which also includes the creation of a Green Bond Standards, climate and ESG benchmarks as well as disclosure guidelines. The taxonomy will be the foundation of the entire package, providing detailed definitions of which activities are green and to which degree. These definitions will inform the Green bond standard, which will define which bonds are can effectively be considered green. Similarly, the definitions will be crucial to the ESG Benchmarks legislation, which will define the sustainability of financial indices.

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In a twitter post revealing the development in negotiations between the European institutions, Commissioner Vladis Dombrovskis described this progress as a “major success (…) for our Sustainable Finance Strategy.”

“This taxonomy – shared understanding, classification and definitions of green economic activities – is fundamental for all Green Deal policies. It will help define what green investment really is and will help fight greenwashing.”

However, this is not the final word on the matter. Sirpa Pietikäinen (Pictured, second from the right), a Finnish MEP from the European People’s Party group, explained that there is still some way to go before the final trialogue between the EP, the EC and the European Council, where European governments are represented. The agreement also still required work on the technical details and ratification by the full European Parliament and Council. The MEP noted that there should be further news around December 18th.

Most recently, Commissioner Dombrovskis discussed the possibility to lower capital requirements on green assets to incentivise investment.

Photo courtesy of European Commissioner Vladis Dombrovskis

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