EU agrees green-financing rules for sustainable investing

Brussels — The EU has agreed on a landmark green-finance regulation, advancing the bloc’s push to embed environmental goals in standards for banks, money managers and insurers.

EU legislators approved an accord on the list of sustainable activities late on Monday, following agreement by the bloc’s member states earlier in the day. Policy makers had to overcome last-minute divisions over the kinds of technologies that should be eligible to be classified as green, with nuclear-energy proponents, including France, seeking revisions to an earlier version of the proposed rules.

“With this deal, we now have a common language and new rules for financial markets,” Pascal Canfin, a French member of the EU parliament, said in an e-mail. The final compromise means that both nuclear and gas could, under certain conditions, be part of the green-finance list, he said.

The EU’s definitions of sustainable activities for investment purposes, or their taxonomy, are the centerpiece of its plan to regulate the fast-growing market of green finance, in the hope of directing trillions of euros to fund a radical overhaul of the region’s economy. It’s meant to define what’s green and what’s not, an effort that could find a range of uses and serve as an example for governments around the world.

The back-and-forth over the rules shows what kind of obstacles the EU has to overcome to meet its ambitious climate targets. Leaders last week agreed that the bloc should achieve zero net emissions by 2050, paving the way for a flurry of legislation that’s needed for the unprecedented clean-up of the economy.

Green Investment

The agreement on the taxonomy is a vital step is it’s meant to help countries shoulder the cost of fighting global warming. “This is the much-needed enabler to get green investments to flow and help Europe reach climate neutrality by 2050,” Valdis Dombrovskis, the European Commissioner in charge of financial-services policy, said on Twitter.

Monday’s agreement on the green investment catalogue is just the first step of the process, setting out the overall framework. The concrete list of activities will be drawn up based on recommendations by a panel of experts and adopted by the European Commission, the EU’s executive arm.

“We are delighted that there is progress in the approval of the EU taxonomy,” Nathan Fabian, chief responsible investment officer at UN-supported Principles for Responsible Investment, said in an e-mail. “Investors in Europe and around the world see the taxonomy as a major reform in investment practices and are keen to understand their obligations under the framework.”

Bloomberg