Legal & Regulatory News

EU Platform on Sustainable Finance publishes final report on Taxonomy extension options supporting a sustainable transition

30 March 2022

On 30 March 2022, the Platform on Sustainable Finance (the Platform) published a report on the potential extension of the EU Taxonomy beyond 'green’ to classify a wider range of economic activities (the Report).

In the Report, the Platform recommends an extended environmental Taxonomy, which it suggests would introduce greater transparency and clarity for investors and ensure market practices are aligned across the EU, particularly in relation to transition.

The Platform notes that the EU Taxonomy already includes different sustainability performance levels and allows financial market participants and institutions to apply them voluntarily, but suggests these levels are not clearly labelled nor easily applicable by market participants. The Platform therefore recommends extending the Taxonomy framework to classify activities according to a traffic light system, including the following categories:

  • unsustainable performance requiring an urgent transition to avoid significant harm;
  • intermediate (amber) performance;
  • unsustainable, significantly harmful performance where urgent, managed exit/decommissioning is required; and
  • low environmental impact activities.

The Platform's full recommendations for Taxonomy extension are set out in Section 8 of the Report.

Click here to access Report.