Featured Product

    EU Reaches Political Agreement on Sustainable Investment Taxonomy

    December 18, 2019

    EU ambassadors endorsed a political agreement reached between Finland's presidency of the Council and the European Parliament on EU-wide classification system, or taxonomy, which will provide businesses and investors with a common language to identify what economic activities can be considered environmentally sustainable. At present, there is no common classification system at EU or global levels to define an environmentally sustainable economic activity. The proposed regulation is meant to reduce fragmentation resulting from market-based initiatives and national practices as well as reduce the practice of marketing financial products as green or sustainable, when they do not meet basic environmental standards.

    The future framework on sustainability will be based on six EU environmental objectives. These are climate change mitigation,climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. The taxonomy for climate change mitigation and climate change adaptation should be established by the end of 2020, to ensure its full application by end of 2021. For the four other objectives, the taxonomy should be established by the end of 2021, for an application by the end of 2022. The taxonomy will be instrumental for EU to become climate-neutral by 2050 and achieve the Paris agreement's 2030 targets. 

    To qualify as environmentally sustainable, economic activities will have to fulfill the following requirements:

    • Contribute substantively to at least one of the six environmental objectives
    • Not significantly harm any of the environmental objectives
    • Be carried out in compliance with minimum social safeguards
    • Comply with specific technical screening criteria

    The taxonomy will include two sub-categories of "enabling" and "transitional" activities. There will be an obligation to disclose, for each financial product, the proportion invested in the enabling and transitional activities. On this basis, EC will be tasked to establish the actual classification by defining technical screening criteria, in the form of delegated acts, for each relevant environmental objective and sector, respectively. EC will be assisted by a technical expert group, the "platform on sustainable finance," which will be mandated to provide advice for developing and revising the technical screening criteria as well as reviewing their usability. In addition, EC will be advised by an expert group consisting of experts from member states on the appropriateness of the technical screening criteria and the approach EC to be taken regarding these criteria. The new rules will be formally adopted by the Council and the Parliament following legal and linguistic revision of the text, pursuant to the "early second reading agreement" procedure.

     

    Related Links

    Keywords: Europe, EU, Banking, Insurance, Securities, Sustainable Finance, Taxonomy, ESG, Climate Change Risk, European Parliament, European Council

    Related Articles
    News

    EBA Analyzes Impact of Unwind Mechanism of Liquidity Coverage Ratio

    EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.

    November 19, 2020 WebPage Regulatory News
    News

    ECB Outlines Views on Possible Changes to AnaCredit Rule and TLTROs

    In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.

    November 19, 2020 WebPage Regulatory News
    News

    IASB Begins First Phase of Post-Implementation Review of IFRS 9

    IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Report Examines Progress in Resolvability of Systemic Institutions

    FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.

    November 18, 2020 WebPage Regulatory News
    News

    EBA Benchmarks National Insolvency Frameworks Across EU

    EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Reports Assess Impact of Pandemic on Financial Stability

    FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.

    November 17, 2020 WebPage Regulatory News
    News

    RBNZ Consults on Implementation of Capital Review Changes

    RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.

    November 17, 2020 WebPage Regulatory News
    News

    IASB Announces Andreas Barckow as the New Chair from July 2021

    The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.

    November 17, 2020 WebPage Regulatory News
    News

    HKMA Consults on Capital Rules for Bank Equity Investments in Funds

    HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.

    November 17, 2020 WebPage Regulatory News
    News

    ESRB Supports Extension of Macro-Prudential Measure by Swedish FSA

    ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).

    November 17, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6153