Why do we need an EU taxonomy?

In order to meet the EU’s climate and energy targets for 2030 and reach the objectives of the European green dealSearch for available translations of the preceding linkEN•••, it is vital that we direct investments towards sustainable projects and activities. The current COVID-19 pandemic has reinforced the need to redirect money towards sustainable projects in order to make our economies, businesses and societies – in particular health systems, more resilient against climate and environmental shocks. To achieve this, a common language and a clear definition of what is ‘sustainable’ is needed. This is why the action plan on financing sustainable growthSearch for available translations of the preceding linkEN••• called for the creation of a common classification system for sustainable economic activities, or an “EU taxonomy”.

What is the EU taxonomy?

The EU taxonomy is a classification system, establishing a list of environmentally sustainable economic activities. It could play an important role helping the EU scale up sustainable investment and implement the European green deal. The EU taxonomy would provide companies, investors and policymakers with appropriate definitions for which economic activities can be considered environmentally sustainable. In this way, it should create security for investors, protect private investors from greenwashing, help companies to become more climate-friendly, mitigate market fragmentation and help shift investments where they are most needed. Read More