The taxonomy now enters the implementation phase for all corporates subject to the Non-Financial Reporting Directive. Implementation. Marshall Geck, Senior Specialist, Stewardship (Climate Action 100+), Washington DC, By Sagarika Chatterjee, Director of Climate Change, the PRI, and COP26 Champions Finance Lead, By Siobhan Archer, Relationship Manager, PRI and Marie Luchet, Director of Continental Europe, PRI, By Margarita Pirovska, Head of Fiduciary Duty in the 21st Century, PRI, and Fiona Stewart, Lead Financial Sector Specialist, Finance, Competitiveness Innovation, World Bank, By Elise Attal, Head of EU and UK policy, Margarita Pirovska, Head of Asia Policy and Multilaterals Policy and Heather Slavkin Corzo, Head of US Policy. Case study: Nordea EU Taxonomy implementation Nordea presentation to the PRI EU Taxonomy Practitioners Group on EU taxonomy implementation Recorded Apr 20 2020 29 mins We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. If you have questions, get in touch. By the end of 2021, Financial Products on sale in the EU will have to reference the EU Taxonomy for Sustainable Activities. For the PRI’s part, we’ve introduced mandatory TCFD reporting and with UNEPFI have launched the UN Net Zero Asset Owner Alliance. It is mandatory to procure user consent prior to running these cookies on your website. The EU Taxonomy provides the clearest picture yet for companies and investors of an economy that can fulfil Europe’s 2030 and 2050 climate goals. Automated page speed optimizations for fast site performance. Financial market participants and companies will be required to complete their first set of taxonomy disclosures, covering activities that substantially contribute to climate change mitigation and adaptation by 31 December 2021. The Taxonomy also plays a crucial role in Europe’s ‘Green Deal’ implementation, as it will help to attract billions of euros needed for the sustainable transition and to achieve carbon neutrality by 2050. Book a free demo with us to determine your organisation’s needs and we will find the best solutions for your company. These cookies do not store any personal information. For this COP, all countries must review their Nationally Determined Contributions (NDCs) and submit mid-century decarbonisation plans in line with their commitments under the Paris Agreement. This ensures the framework’s flexibility, which will enable investors to put the tool into practice. Belgium and Luxembourg: the next frontier for responsible investment? On 22 June 2020, the long-awaited Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment (the “EU Taxonomy Regulation”), and amending Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the “SFDR”) was published on the Official Journal of the European Union. O n 22 June 2020, the long-awaited Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment (the “EU Taxonomy Regulation”), and amending Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the “SFDR”) was published on the Official Journal of the European Union. General Secretariat of the Council Public … In this case, the climate change mitigation target is Europe’s commitment to net zero carbon emissions by 2050. By clicking “Accept”, you consent to the use of ALL the cookies. COP26 has been badged the ‘net zero’ COP. Lastly, the UK is also planning on introducing its own green taxonomy in the following years. Action Learning Values: How Can Companies Benefit From It? The European Council is the EU institution that defines the general political direction and priorities of the European Union. When it is implemented in 2020, the European Union’s (EU) taxonomy on environmental, social, and governance (ESG) will be the first time 28 countries belonging to a common area will have clear and defined rules on ESG investing and transitioning to a low-carbon economy. The TEG released its draft taxonomy for sustainable economic activities in December 2018 5.The EU Taxonomy will be used as the basis for many aspects of the EU Action Plan 6, such as devising a standard for green bonds, ECO labels for sustainable funds and gauging how much of a company's overall turnover actually comprises sustainable activities.While the EU Taxonomy is … are welcome as a means to ensure social resilience in the transition towards a more sustainable economy and integrate crucial social considerations in the framework. If you have any questions, please contact us at blog@unpri.org. Date: Thursday 15th October Time: 3-4pm BST/ 10-11am EST Join FTSE Russell and panelists for a discussion on the forthcoming EU Taxonomy directive. Moreover, reliable green data that supports investors when making decisions may lack or be incomplete in many cases. To be included in the proposed EU Taxonomy, an economic activity must contribute substantially to at least one environmental objective, and do “no significant … Moreover, the economic activities should comply with the minimum safeguards regarding human rights. Our modules are built on fun, team-work and thinking outside the box. 15 December 2020. The European Council is the EU institution that defines the general political direction and priorities of the European Union. To learn more, including how to block cookies, read our privacy policy. – Andrew Bailey, Governor of the Bank of England, as quoted by S. Aionesei, 2020, ‘UK Announces Climate Focused Financial Services Regime’, JD Supra. The implementation of EU Taxonomy-aligned approaches by European investors will have major implications for land managers and agricultural companies across the world. It is not yet clear whether the implementation will be done in phases or through a “big bang” approach. And acting now gives us the best opportunity to manage those risks”. This is an attempt by the European Commission to prevent market players from supporting greenwashing activities and invest in sustainable solutions instead. What are the Principles for Responsible Investment? With this in mind, the TEG’s climate-related disclosures guidelines will upgrade the Non-Financial Reporting Directive (NFRD) on the social and environmental impacts of company activities. In the future, the use of eco-labels will define the alignment with the Taxonomy Regulation. In November 2020, the UK Government published an Interim Report of the TCFD together with a roadmap towards mandatory climate-related disclosures. It specifies what level of environmental performance a service or product should have if it is going to contribute to Europe’s environmental objectives. To view this protected post, enter the password below: by Anna Klis | Dec 8, 2020 | Employee engagement, Gamification, SDG Goals, Sustainable development goals. The 2020 taxonomy will be mandatory for annual financial reports containing financial statements for financial years beginning on or after 1 January 2021. Our goal is to contribute to the broader debate around topical issues and to help showcase some of our research and other work that we undertake in support of our signatories. The EU Taxonomy is at the heart of the EU’s action plan on sustainable finance. For now, it represents a set of guidelines for the majority of companies, while reporting is not mandatory for most. The taxonomy matters – most importantly because it is a serious effort by financial regulators to mandate disclosure against a sustainability target, rather than a financial one. The Green Finance Strategy document further noted that, in order to ensure the government “has the option of onshoring the EU’s proposals into UK law, regardless of the EU Exit outcome”, the Taxonomy would be included as part of the Financial Services (Implementation of Legislation) Bill. The roadmap presents a coordinated strategy for 7 categories of organisations: Starting 1 January 2021, premium listed companies in the UK will need to report on how climate change affects their business, in accordance with the recommendations of the TCFD. Taxonomy implementation Principles, criteria, thresholds. Taxonomy disclosures will help companies and issuers access green financing to decarbonise high-emitting sectors and grow low-carbon sectors. Blogs. Save my name, email, and website in this browser for the next time I comment. In essence, it is a list of economic activities that can be considered (environmentally) sustainable when fulfilling certain criteria. The implementation date for the Taxonomy also remains unclear; the EU Parliament would like to implement the Taxonomy as soon as possible, while the EU Council wants to postpone until 2022. 5 Brands That Are Doing Black Friday Right, sustainable use and protection of water and, life insurers and FCA-regulated pension schemes. The taxonomy matters – most importantly because it is a serious effort by financial regulators to mandate disclosure against a sustainability target, rather than a financial one. Clarmondial and Versant Vision are supporting investors in assessing the EU Taxonomy and adapting their policies, procedures and strategies accordingly. Subscribe to our newsletter to keep up to date with the latest news and insights. EU Taxonomy. The European Green Deal Investment Plan aims to create an attractive framework for private investors and the public sector to facilitate sustainable investments. In order to line up with the Taxonomy Regulation, economic activities need to considerably contribute to one of the six aforementioned environmental objectives, and not significantly harm any of the other five. The response to the COVID-19 outbreak has shifted the focus of financial institutions to essential regulatory and supervisory actions and is significantly limiting the available time of institutions to prepare the implementation of new legislation. Then, we used MSCI ESG data to verify technical screening criteria and aligned revenues. Moreover, for investors to accurately report on the extent of Taxonomy alignment of their funds, the EU Commission will also formulate standards for green debts and green loans. This document is containing non-binding information, and may be subject to further changes. PRI signatories commonly ask how they should measure their climate commitments. Sustainalytics is following the developments closely. This course is organized by Bonnier Aktuell Hållbarhet in partnership with Enact. Course participants develop their own action plan; 16.00 Looking ahead – The continued development of the … What’s in the EU Taxonomy? The Commission is committed to ensure a swift implementation of all 35 actions. by Iulia Georgiana EneDec 15, 2020Impact, Sustainability0 comments. A chain of regulation to improve transparency and strengthen protection … It is a classification system that enables categorization of economic activities/sectors that play key roles in climate change mitigation and adaptation. 4 Factor Back Test “Brown” Basket Total exposure to Green Revenue The EU Taxonomy The Taxonomy is a list of economic activities within different sectors with technical screening criteria to substantially contribute and not to significantly harm environmental objectives. The Top 4 Priorities To Make Your Office More Sustainable. France, while Germany is making extensive efforts towards gradually removing it. Comments on the EU … EU taxonomy final report: 2020 starts a decade of action on climate change. According to Flemming Hedén, Senior Advisor at the Climate policy unit of Sweden’s environmental protection agency, the EU Taxonomy Regulation ensures a “single standard for everyone, which clears confusions and facilitates cross border investment flows towards the green transition” (as paraphrased by Filipe Wallin Albuquerque, 2019, “EU Taxonomy – Room for Improvement”). Action Learning Values: How Can Companies Benefit From It? These cookies will be stored in your browser only with your consent. It has since been published in the Official Journal and entered into force on 12 July 2020. The TEG acknowledges that the strict timeline presents challenges in terms of implementation, while they need to work on technical screening criteria for financial market participants. Register now. To help investors understand how to implement the taxonomy, the PRI has established a practitioners’ group, representing a wide membership, including US and Japanese investors. This is considered sustainable in e.g. EU Taxonomy The Platform on Sustainable Finance Taxonomy will be the base for the coming Ecolabel, the EU Green Bond Standard and for standards and labels at national level set on green investments The taxonomy expands the investment universe as it includes transitioning activities e.g. Here is an overview of the expected timeline for the implementation of the EU taxonomy and several broader developments. Engaging the Taxonomy Regulation sooner rather than later has the potential to ensure a competitive advantage. Examples of transition activities include cement manufacturing and freight transport – activities that are not typically considered environmentally friendly, but for which good practice exists, and which are – and will be – an important part of Europe’s economy. EU Taxonomy The Platform on Sustainable Finance Taxonomy will be the base for the coming Ecolabel, the EU Green Bond Standard and for standards and labels at national level set on green investments The taxonomy expands the investment universe as it includes transitioning activities e.g. The European Commission encourages all economic agents to use the Taxonomy Regulation to ensure the sustainability character of their investments and activities. They concern some of the most urgent environmental issues that confront humanity: The EU Taxonomy already came into effect in July 2020. An EU Taxonomy is indispensable in making the EU climate targets implementable in practice. These are activities that do not have either positive or negative impacts on environmental, social, and governance criteria. By the end of 2021, Financial Products on sale in the EU will have to reference the EU Taxonomy for Sustainable Activities. EU taxonomy final report: 2020 starts a decade of action on climate change. This document sets out the results of the work to date undertaken by the Technical Expert Group on Sustainable Finance (hereafter, ‘TEG’) in relation to the development of an EU classification system for environmentally sustainable economic activities (hereafter ‘Taxonomy’). Last week, the European Commission’s Technical Expert Group on Sustainable Finance (TEG) published its final report along with a technical annex setting forth its recommendations regarding the design and implementation of a unified classification system, known as EU Taxonomy, which will define what economic activities are considered environmentally sustainable under the EU’s … They conducted the desk-based review against the criteria set out in the EU Taxonomy for Sustainable Activities Technical Report, dated June 2019, Section 22.3 – Production of Electricity from Wind Power. The UK Government has ambitious climate change mitigation initiatives as well. The co-chairs of the sustainable finance committee will provide an update on the work of the committee. On 1 July, Germany will assume the Presidency of the Council of the European Union at a time where Europe is seeking additional reforms to align the financial system with the EU’s sustainability goals and kick-start European recovery after the coronavirus pandemic. On 10 November 2020, the Commission adopted the first Action Plan’s milestone: a proposal for a Regulation to modernise EU legislation on batteries. New legislation stemming from the EU Action Plan for a greener economy requires asset managers to classify all their investment products on the basis of sustainability by March 2021. Provisional agenda for the fifth ordinary meeting of the Withdrawal Agreement Joint Committee. The EU taxonomy is a tool to help investors understand whether an economic activity is environmentally sustainable, and to navigate the transition to a low-carbon economy. A tool to navigate the low carbon transition The Taxonomy is essentially a tool that will help ... Period End Date Dec 2018. Next steps: The European Parliament voted on its position on this file in March 2019. Final report of the TEG on the EU taxonomy In order to inform its work on the action plan, including on the EU taxonomy, the European Commission established a Technical Expert Group (TEG) on sustainable finance in July 2018. On 22 June 2020, the Taxonomy Regulation was published in the Official Journal of the European Union and entered into force on 12 July 2020. According to the EU Commission, the Taxonomy for climate change mitigation and climate change adaptation ought to be established by the end of 2020, and applied by end of 2021. To date, most financial regulators have focused their efforts on financial risk. The Taxonomy is an example of what is known as “in-flight” EU regulation, being EU regulation for which the principal instrument is in force at the time the UK on-shores EU law under the European Union (Withdrawal) Act 2018 (“EUWA”) on 31 December 2020 (known as the Implementation Period Completion Date (“IPCD”), but for which further detail of regulation, for instance in the form of RTS, does not come … Please note that although you can expect to find some posts here that broadly accord with the PRI’s official views, the blog authors write in their individual capacity and there is no “house view”. Provisional agenda for the fifth ordinary meeting of the Withdrawal Agreement Joint Committee . This tool is essential for the implementation of the EU Green Deal (TEG,2020). The proposed EU taxonomy [1] ... so data availability is probably the greatest hurdle to the rapid implementation of the taxonomy. A greener future is a top priority for the European Union, now that the 2030 target date for achieving the environmental goals set out in the Paris Agreement and the UN’s Sustainable Development Goals (SDGs) is less than a decade away. Furthermore, adherence to the Taxonomy Regulation may often differ between countries, depending on the local markets, resources, and conditions. For more, check out Enact’s all upcoming trainings and events here! Supporting policy makers and regulators to build a sustainable financial system, Key sustainable investment policies in 2020, The PRI is an investor initiative in partnership with, PRI Association, 25 Camperdown Street, London, E1 8DZ, UK. However, as of this moment, reporting is compulsory only for the following two groups: The objective of the Regulation “is to focus the minds of corporates on investing and delivering returns from these activities, and to provide investors with the data they need to be able to direct their capital to sustainable practices.” (Bloomberg Professional Services, 2020, “The EU Taxonomy for sustainable finance: FAQs for financial market participants”). The latter sets out an indicative path over the next five years. minimum safeguards. Crucially, an activity will only be consistent with the taxonomy if it does no significant harm to the other environmental objectives, and meets minimum safeguards, defined in line with the OECD Guidelines on Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. The final compromise text of the proposed Regulation on the Establishment of a Framework to Facilitate Sustainable Investment (2019/0178(COD)), also known as the Taxonomy Regulation, was agreed by the Council of the EU on 17 December 2019. But opting out of some of these cookies may have an effect on your browsing experience. Annex V presents an analysis providing top-down estimates for the three KPIs included in the call for advice, for the EU economy as a whole and by Statistical Classification of Economic Activities in the European Community (NACE) macro sector, based on a methodology developed by the EC Joint Research Centre report on the EU Taxonomy. The letter from the Treasury states that: "Under the terms of the European Union (Withdrawal) Act 2018, only legislation which comes into force before or during the implementation period will become retained EU law. The Taxonomy tool requires investors, companies, and financial institutions to outline the environmental sustainability of their economic activities and defines technical screening criteria for economic activities. The EU taxonomy: a generational shift for responsible investment. The Taxonomy is a list of economic activities within different sectors with technical screening criteria to substantially contribute and not to significantly harm environmental objectives. requires investors, companies, and financial institutions, planning on introducing its own green taxonomy, UK Announces Climate Focused Financial Services Regime, Protected: The Top 4 Priorities To Make Your Office More Sustainable. This course is organized by Bonnier Aktuell Hållbarhet in partnership with Enact. The EU-wide green taxonomy set out by the Taxonomy Regulation represents one pillar of the regulatory proposals under the Action Plan and is due to be implemented in stages, commencing from 10 March 2021. We used Bloomberg eligibility data. Therefore, companies need to understand the basis and implications of the new Taxonomy framework and identify areas of business where it can be implemented. ... implementation of the framework and its potential consequences on financial markets. Therefore, in June 2017 the UK Government published the Taskforce on Climate-related Financial Disclosures (TCFD). It has six parts: PART A Explanation of the Taxonomy approach. The EU Taxonomy already came into effect in July 2020. Our target is to apply the EU taxonomy to all funds and mandates as soon as possible. Copyright © European Insurance and Occupational Pensions Authority, 2019 Contact: xbrl@eiopa.europa.eu. ESMA published a consultation paper containing its draft advice to EC on Article 8 of the Taxonomy Regulation. Taxonomy implementation Principles, criteria, thresholds. The Taxonomy Regulation comes with its own pros and cons. The technical screening criteria define performance thresholds for economic activities that have an impact on six environmental objectives. By Fiona Reynolds (@Fireynolds), CEO, PRI. European asset managers and financial market advisors have a daunting task ahead of them in the coming four months. Minimum safeguards (Art 13) The . We encourage you to familiarise yourself with the TEG’s user guidance and review the relevant resources on the PRI’s website. In any event, while the implementation of the taxonomy remains uncertain, it is expected that the standards and requirements developed at the EU level will underpin the approaches taken across the UK financial sector, in line with the Government’s commitment to at least match the ambition of the objectives of the EU’s Action Plan 23. However, decision-makers can be one step ahead of the regulation changes. The EU Taxonomy is primed to reshape the landscape for responsible investment in Europe and accelerate the shifting of capital towards the objectives of European Commissions’ Sustainable Finance Action Plan. The list of economic activities and performance thresholds will be issued as part of the explicit legal requirements from the European Commission by the end of 2020. Governance of Taxonomy Releases and Schedule 2019- 2021. EU Taxonomy. On climate change mitigation, the taxonomy includes activities already consistent with net-zero carbon emissions by 2050, and importantly, transition and enabling activities too, where they are on a clear pathway to reaching the net-zero target. Our newsletter to keep up to date with the latest news and insights,... And conditions newsletter to keep up to date, most financial regulators have focused their on. How they should measure their climate commitments prior to running these cookies will be stored in your browser with. 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