- In a move meant to stamp out so-called greenwashing, EU negotiators have reportedly agreed on a categorisation system to decide which financial products could be marketed as green.
- This rule book, known as the “taxonomy for sustainable activities”, will split sustainable investments into three categories; “green” (renewables), “enabling” (e.g. steel production for rail infrastructure), and “transition” (not fully renewable but reducing emissions – perhaps gas).
- According to Bas Eickhout, a Green MEP involved in the negotiations, the new rules will require every company to disclose their activities “under strict and ambitious EU criteria, rather than using their own methodologies”.
- Following approval from MEPs and EU governments, which is expected before the end of the year, the new framework will probably come into force in 2021.
Analysis and Comments
- While the final details have not been released yet, this marks an important step towards helping corporates and the investment community judge the green credentials of financial products.
- Notably, the whole framework has been designed to assist with “making a substantial contribution to climate goals and to the related SDGs”.
- Removing ambiguity should see an increased amount of funding going into those activities included, which should accelerate de-carbonisation and reduce GHGs.
- Additionally, we think it should lead to a further gap opening up in valuations between those companies in a sector with higher exposure to activities included in the taxonomy and those with none/minimal exposure.
- One of the big question marks remains whether or not nuclear and gas would be considered sustainable, with some press reports leaning towards the exclusion of nuclear due to the “do no harm” principle, with the FT reporting that “the commission is expected to come up with a definition of the principle in the coming months”.
- With the global climate change conference (COP25) currently on-going in Madrid, experts expect there will be a large number of further news reports on this topic over the next few days.
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CO2 tax is a complete failure tho in most countries... germany started with a conservative 10€ per ton of CO2 (cute)... with the planned steady increase it will only make a difference of 9cent in fuel price. germany is car nation and they are likely to block any CO2 tax action, while telling the public in interviews "yea we are the definition of green politics, i dont even get why all these 300 000 enviromental protestors are out on the street and rezo saying otherwise". other EU countries have not even attempted any climate reforms yet.
Indeed, and their Energy Policy is a nightmare ! Full Coal ! with neighbour Poland also doing the same…
Merkel was emotional when she decided to stop ALL nuclear plants right away, dumbest thing EVER !
100% agree. they even prioritize the nuclear exit 2022 (clean energy) over the coal exit 2038.