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EU Taxonomy: directing the financing of the real economy towards sustainability

On 12 July 2020 the Taxonomy Regulation (Regulation 2020 /852) entered into force, which establishes the basis for a classification system for sustainable economic activities by setting the criteria for environmentally sustainable activities and establishing the environmental objectives.

The EU Taxonomy will provide companies, investors and policymakers with appropriate definitions for which economic activities can be considered environmentally sustainable.

The objective is to direct financing towards sustainable projects and activities in order to scale-up environmentally sustainable investment enabling the implementation of the Green Deal.

While the EU Taxonomy concerns primarily the finance sector, it will have an indirect effect on electrical wholesalers as they will have to take it into account, when they are requesting credits from banks for their investments.

The Taxonomy regulation established 6 environmental objectives:

  1. Climate change mitigation

  2. Climate change adaptation

  3. The sustainable use and protection of water and marine resources

  4. The transition to a circular economy

  5. Pollution prevention and control

  6. The protection and restoration of biodiversity and ecosystems

The Commission has now to come up with Delegated Acts to establish the actual lists of environmentally sustainable activities. A first delegated act on climate change mitigation and climate change adaption has been formally adopted by the Commission on 4 June 2021. A further delegated act for the remaining objectives is expected to be published in 2022.

The Commission published the EU Taxonomy Compass which aims at facilitating the access to information on the content of the EU Taxonomy.


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