Stockholm (NordSIP) – On Wednesday, April 15th, the Council of the European Union formally adopted a Regulation establishing a framework to facilitate sustainable investment – the EU Sustainability Taxonomy (EUST).
The Regulation foresees the establishment of an EU Sustainability Taxonomy (EUST) embedding EU sustainability policy objectives and laying the ground for a shared definition of core aspects of sustainability.
The goal is for the Taxonomy to provide businesses and investors with a common language to identify those economic activities which are considered environmentally sustainable and enable investors to refocus their investments on more sustainable projects. The new Regulation will also assist the EU in becoming climate neutral by 2050 and achieving the Paris agreement’s 2030 targets.
The framework targets on six goals: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.
The taxonomy for climate change mitigation and climate change adaptation should be established by the end of 2020 to ensure its full application by the end of 2021. For the four other objectives, the taxonomy should be established by the end of 2021 for application by the end of 2022, according to the Council.
The April 15th decision was adopted by the finance ministers of the EU member states was adopted in its first reading. It follows a compromise agreement between the European Parliament and the European Commission and then with the Council of the EU at the end of 2019 regarding the details of the Regulation.
The next step in the legislative process requires the same version of the Regulation to be adopted by the European Parliament at second reading before it comes into effect.