WHO DOES IT APPLY TO? With a myriad “eco-friendly” investment products on the market, the rules also aim to stamp out greenwashing, whereby organisations exaggerate their environmental credentials. From next year, providers of financial products — including pension providers — in the EU must disclose which investments comply with the taxonomy’s climate criteria. For each investment, fund or portfolio, they must disclose what share of underlying investments comply with the rules.
WHAT’S IT FOR? Here’s what you need to know.
The EU’s goal to eliminate its net emissions by 2050 will require huge investments, much of it private funding. The taxonomy aims to make green activities more visible and attractive to investors. Starting next year, the long-awaited rules will decide which economic activities can be labelled as a sustainable investment in the EU.
The taxonomy is a long list of economic activities — from steel plants, to wind power generation, to building renovations — plus detailed environmental criteria that each must meet to be deemed green. The rules classify three types of green investments. WHAT MAKES A ‘GREEN’ INVESTMENT?
That means polluting companies can get recognition for making green investments. For example, if an oil company invested in a wind farm, it could label that expenditure as green. Large companies and listed firms must also disclose what share of their turnover and capital expenditure complies.
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