European Commission Publishes FAQs on Sustainable Finance Initiatives

The European Commission has published Frequently Asked Questions on the EU taxonomy and Green Bond Standard. The EU taxonomy is a classification system that will create a common language for sustainable activities, to help determine whether an economic activity is environmentally sustainable. The Green Bond Standard establishes labels for financial products that are judged to be "green". The taxonomy and Standard are two products of the Commission's 2018 Action Plan on Financing Sustainable growth.

The FAQs cover:
 

• The legal process and further development of the taxonomy;
• The Commission's Platform on Sustainable Finance, an advisory body established under the EU's proposed Taxonomy Regulation, which will advise on various topics related to the Regulation including technical screening criteria and policy development on sustainable finance;
• International cooperation on taxonomies, including the extent of the Taxonomy Regulation's extra-territorial reach;
• How the taxonomy should be used, including guidance on national regulators' monitoring of compliance by financial market participants with taxonomy disclosure obligations and information on how financial product issuers can meet their disclosure obligations;
• How the taxonomy will relate to particular sectors e.g. nuclear energy and waste incineration;
• The extent to which the Commission intends to enforce the Green Bond Standard; and
• How the taxonomy should be used.

The EU Taxonomy Regulation is likely to be finalized this year. The has published a final report on certain content for much of the secondary legislation that will accompany the Taxonomy Regulation. This will be among the TEG's final work, with its mandate now ending in September 2020.

View the Commission and TEG's FAQs.

View details of the TEG's taxonomy recommendations.
 
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