Setting their priorities for the coming years, European Union finance ministers endorsed a classification system for sustainable investments and said they would work to direct additional private capital to such investments at an Economic and Financial Affairs Council meeting Thursday.
A classification system for sustainable investments, known as EU taxonomy, is currently being negotiated with the European Parliament by the European Council, which comprises heads of EU states. Following the negotiation, one taxonomy is set to be implemented into all EU legislation.
The EU finance ministers did not provide additional information on how they planned to increase private capital allocated to sustainable investments.
The ministers also endorsed the council’s action plan on climate change, which is aimed at reducing carbon emissions across Europe by 2030. To accomplish that, the EU has said it needs an estimated €180 billion ($198 billion) in investments.
The ministers said they will continue to engage with each other on issues such as sustainable finance, green budgeting, carbon pricing, green taxation and environmentally harmful subsidies.
Responding to the political agreement, Fiona Reynolds, CEO of United Nations Principles for Responsible Investment, said in an emailed comment that the classification system underpins disclosure requirements and bridges the gap between the 2015 Paris Agreements and investment practices.
“The taxonomy will enable investors to determine the proportion of revenue from sustainable economic activities financed by the investment portfolio,” Ms. Reynolds said. “The taxonomy will also support active ownership efforts: Investors and companies can use the taxonomy to identify future growth opportunities.”
Tanguy van de Werve, director general of European Fund Management Association, said in an emailed comment: “As the voice of the European asset management industry, we support the EU’s political objective to fight climate change and meet the Paris agreement goals, and have been following closely the negotiations on EU taxonomy regulation. (It’s) crucial that investee companies are required to disclose all key data needed to evaluate the investment against the EU taxonomy.”
