The European Green Deal provides a roadmap setting out how the EU intends to achieve its objective of being climate-neutral by 2050. The plan revolves around the idea of decoupling economic growth from resource consumption, the de facto consequence of which is that in future, growth will by definition have to be sustainable.
the EU intends to achieve its objective of being climate-neutral
The EU's action plan aims to use regulation to create a situation in which the financial system promotes sustainable economic development. What this means in practice is directing capital flows towards sustainable investments, increasing transparency and highlighting the financial risks that arise if ESG issues are neglected.
„Today’s new rules are a game changer in finance. (...) What we now need to do is turn words into action.“
On the European Commission's website you will find detailed information on sustainable finance and the EU taxonomy.
The EU taxonomy, which is one of the elements of the action plan, makes it possible to measure the sustainability of specific economic activities. While the taxonomy's six objectives are at the moment still limited to environmental factors, additions to cover social dimensions of sustainability are already being considered. All the criteria are solely about compliance – and compliance must be achieved without causing adverse consequences elsewhere.
Key terms associated with the issues of sustainability and green finance - explained in a clear and straightforward way.