The European Commission’s so-called “taxonomy” for classifying green investments should deal with three essential concerns. Unfortunately, the Commission’s one-dimensional approach disregards two of this three, with potentially consequences that are damaging.
PARIS – European Union user states plus the European Parliament are quickly likely to follow a so-called “taxonomy” for classifying green investments, after reaching contract final month on a summary of “sustainable” financial tasks. After the system that is new into force, almost certainly this season, the European Commission will utilize this list to ascertain which monetary assets and items are sustainable.
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This taxonomy may be the backbone of this Commission’s regulatory package on sustainable finance, which includes the committed objective of “reorienting money flows towards sustainable investment, to have sustainable and comprehensive development. ” The Commission hopes that the brand new labeling scheme will deal with the difficulty of market players “greenwashing” non-sustainable financial items and act as the foundation for policy incentives to market sustainable investment.
To be fit for function, but, the taxonomy must deal with three essential concerns. Regrettably, the EU’s one-dimensional approach disregards two associated with the three, with possibly harmful consequences.