Legal & Regulatory News

EU reaches political agreement on a unified EU classification system

Political agreement has been reached on an EU-wide classification system, or 'taxonomy', which will provide businesses and investors with a common language to identify what economic activities can be considered to be environmentally sustainable.

The taxonomy is intended to provide a common point of reference for the market and, accordingly, it is hoped the taxonomy will reduce the risk of 'greenwashing'. The taxonomy will not consider investments in coal to be sustainable, but will retain a neutral stance in relation to different energy forms, provided that they are low in greenhouse gas emissions.

In addition, the taxonomy will include two sub-categories of activities: 'enabling' and 'transitional' activities. For each financial product, there will be an obligation to disclose the proportion invested in these enabling or transitional activities.

The taxonomy for climate change mitigation and climate change adaptation is intended to be finalised by the end of 2020, in order to ensure its full application by end of 2021.

Click here to access the press release.