Parliament’s Co-rapporteur Sirpa Pietikäinen is pleased with the finalisation of the law. “As we prepare for an unforeseen economic recovery following the corona crisis, tools for assessing the environmental impact of an investment and public spending are today needed more urgently than ever was thinkable when the EU taxonomy proposal was first proposed.”
Pietikäinen reminds that trillions of euros are being injected in the economy, as part of EU and national measures. More will follow once the EU Recovery Plan will be agreed on. “It is a necessity to ensure these trillions are directed to a recovery that is sustainable in the long term. No euro should be spent on unsustainable economic activity or businesses. Otherwise we will be leaving to future generations both public and climate debt.”
The Taxonomy Regulation will create harmonised criteria for which investments can be considered as sustainable and to what degree. Investors will need to be informed if a financial product does not adhere to the EU Taxonomy. Large corporates will also be required to report the share of taxonomy aligned activities of their turnover or capital or operating expenditure.
“EU taxonomy and the do no significant harm principle will have to be taken into use not only in private finance but in all EU finance and spending, including EU and national programmes”, Pietikäinen says. “The future corona recovery package must ensure that national recovery plans and fully in line with EU taxonomy and the DNSH principle. It is a question about responsible public spending.”
The first EU standards under Taxonomy regarding climate mitigation and adaptation will be published at the end of this year and will apply as of 2022. Together with the Disclosure Regulation, the EU Taxonomy will provide transparent and comparable information on environmental impact and risks, helping channel investments into more sustainable projects.
According to Pietikäinen, a historic change is underway. “The EU Taxonomy is a revolutionary step towards correcting the way financial sector and the real economy price in, or rather do not price in, negative environmental externalities. The Recovery Plan after the Corona pandemic and the upcoming follow up to the EU Sustainable Finance Strategy are an opportunity to speed up the necessary transition into a sustainable economy.”
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