European Council Adopts Taxonomy Regulation for Sustainable Finance

The European Council (Council) adopted a regulation establishing a EU-wide common classification system “to encourage private investment in sustainable growth and contribute to a climate neutral economy”; and the Council hopes to establish this taxonomy by the end of 2021. The taxonomy aims to give investors and businesses a way to identify environmentally sustainable economic activities through common language. The EU has a 2050 target to become climate neutral and a 2030 goal to reach Paris agreement targets, and the taxonomy is expected to help achieve these goals by empowering investors to adjust their investments to “more sustainable technologies and businesses”.

Eventually, a framework will be implemented based on six environmental objectives set up for the European Union, as follows:

1) climate change mitigation;
2) climate change adaptation;
3) sustainable use and protection of water and marine resources;
4) transition to a circular economy;
5) pollution prevention and control;
6) protection and restauration of biodiversity and ecosystems.

The press release on the sustainable finance taxonomy can be viewed here.

Council of the European Union