Eu Green Bond Standards - Eu Taxonomy
The EU Taxonomy is a framework developed by the European Union to facilitate sustainable investments and guide economic activities towards environmental objectives. It is part of the EU's efforts to promote sustainable finance and achieve the goals outlined in the European Green Deal.
The taxonomy sets out a classification system for economic
activities, establishing criteria to determine whether an activity can be
considered environmentally sustainable. It aims to provide businesses and investors
with a common language and transparent criteria for identifying environmentally
sustainable activities and investments.
The EU Taxonomy aims to provide clarity and transparency in
sustainable investments, promote green economic activities, and help the EU
achieve its sustainability goals. It serves as a tool for investors,
businesses, and policymakers to drive the transition to a more sustainable and
low-carbon economy.
Eu Green Bond Standards
The EU Taxonomy Regulation was adopted in 2020 and entered
into force on July 1, 2021. It requires large companies and financial
institutions in the EU to disclose the extent to which their activities or
investments are aligned with the taxonomy's criteria. The taxonomy is expected
to be gradually expanded and refined over time.
For an economic activity to be considered environmentally
sustainable, it must meet several technical screening criteria established by
the taxonomy. These criteria are designed to ensure that the activity makes a
substantial contribution to at least one of the environmental objectives while
not significantly harming any of the others.
As of my knowledge cutoff in September 2021, the European
Union (EU) has not established specific green bond standards at the EU level.
However, the EU has been actively working on developing a framework for
sustainable finance, including green bonds.
In July 2020, the EU introduced the EU Taxonomy Regulation,
which provides a classification system for sustainable economic activities.
While the taxonomy itself does not directly address green bonds, it establishes
criteria for determining the environmental sustainability of various economic
activities, including those that could be financed through green bonds.
In addition to the taxonomy, the EU has been working on a
set of guidelines known as the EU Green Bond Standard (EU GBS). The EU GBS is
expected to provide a voluntary framework for issuers to certify their green
bonds and ensure that they meet certain environmental standards. The standard
is aimed at promoting transparency, integrity, and comparability in the green
bond market.
The EU GBS is being developed by the European Commission's
Technical Expert Group (TEG) on Sustainable Finance, which consists of experts
from the financial industry, academia, and civil society. The TEG published a
draft of the EU GBS in March 2021 and is currently in the process of collecting
feedback from stakeholders.
Once finalized, the EU GBS is expected to provide clear
criteria and guidelines for issuing and verifying green bonds, including the
selection of eligible projects, the use of proceeds, and the reporting and disclosure
requirements. The standard aims to enhance investor confidence in green bonds
and promote the growth of sustainable finance in the EU.
It's important to note that the information provided here is
based on my knowledge as of September 2021, and there may have been further
developments or updates since then. I recommend consulting the latest official
sources and regulations for the most up-to-date information on EU green bond
standards.
Eu Taxonomy Regulation
The EU Taxonomy Regulation is a significant piece of
legislation introduced by the European Union to establish a framework for
sustainable finance and guide economic activities towards environmental
objectives. The regulation was adopted in 2020 and entered into force on July
1, 2021.
Here are some key aspects of the EU Taxonomy Regulation:
- Scope: The regulation applies to financial market participants, including asset managers, insurance companies, pension funds, and investment advisers, as well as large companies with more than 500 employees. It requires these entities to disclose the extent to which their activities or investments align with the taxonomy's criteria.
- Environmental Objectives: The taxonomy covers six environmental objectives: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.
- Technical Screening Criteria: The regulation sets out specific technical screening criteria that define whether an economic activity can be considered environmentally sustainable. These criteria take into account greenhouse gas emissions, resource use, land use, and other relevant factors.
- Disclosure Requirements: The regulation mandates the disclosure of the proportion of a company's turnover, capital expenditure, and operational expenditure that is derived from environmentally sustainable activities. It also requires financial market participants to disclose the alignment of their investment portfolios with the taxonomy's criteria.
- Delegated Acts: The European Commission is empowered to adopt delegated acts to further specify the technical screening criteria for different economic activities. These acts provide additional guidance and details on how to determine the environmental sustainability of various sectors.
- Transition Periods: The regulation includes transition periods for certain sectors to adapt to the taxonomy requirements. During these periods, certain activities may be considered as making a significant contribution to climate change mitigation or adaptation, even if they do not fully meet the technical screening criteria.
The EU Taxonomy Regulation aims to enhance transparency,
consistency, and comparability of sustainable investments within the EU. It
provides a common language and framework for investors, businesses, and policymakers
to identify environmentally sustainable economic activities and investments.
The regulation is expected to be gradually expanded and refined over time,
covering more sectors and addressing further environmental objectives.
