“Green” investment products are on the surge, and the trend is growing. As sustainable investing moves to the new normal, we discuss how the EU taxonomy has provided the necessary framework to help investors evaluate the environmental impact of their investments.
The EU taxonomy is part of the EU Action Plan that includes a number of new sustainable finance regulations and seeks to flow capital to more sustainable businesses. It was introduced in June 2020 to drive ESG criteria into investment decisions.
“If it works properly, the EU taxonomy will help determine the sustainability of all activities and stop financial players falsely labeling unsustainable investments as climate-friendly. The taxonomy’s classification should inform public and private investment decisions, and it is a new powerful tool to make the EU economy environmentally and socially sustainable.” – writes Sébastien Godinot, Economist at the WWF European Policy Office, in this article in March 2020.
Therefore, the desired effect is to protect both investors and companies against accusations of greenwashing and to provide a cohesive framework to assess investments and loans. So, more than a year after the EU taxonomy has come to effect, let’s ask:
