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

    APRA Reviews Repayment Deferral Plans, Identifies Best Practices

    APRA has concluded its review of the comprehensive plans of authorized deposit-taking institutions for the assessment and management of loans with repayment deferrals.

    September 22, 2020 WebPage Regulatory News
    News

    ESAs Assess Risks to Financial Sector After COVID-19 Outbreak

    ESAs (EBA, EIOPA, and ESMA) published the first joint report that assesses risks in the financial sector since the outbreak of the COVID-19 pandemic.

    September 22, 2020 WebPage Regulatory News
    News

    BoE Confirms Withdrawal of COVID Corporate Financing Facility

    BoE and HM Treasury confirmed that the COVID Corporate Financing Facility (CCFF) will close for new purchases of commercial paper, with effect from March 23, 2021.

    September 22, 2020 WebPage Regulatory News
    News

    ECB Allows Temporary Relief in Leverage Ratio Amid COVID-19 Pandemic

    ECB published a decision allowing the euro area banks under its direct supervision to exclude certain central bank exposures from the leverage ratio.

    September 21, 2020 WebPage Regulatory News
    News

    ESAs Launch Survey on Templates for Product Disclosures Under SFDR

    ESAs launched a survey seeking feedback on the presentational aspects of product templates under the Sustainable Finance Disclosure Regulation (SFDR or Regulation 2019/2088).

    September 21, 2020 WebPage Regulatory News
    News

    ECB Proposes Integrated Reporting Framework to Reduce Burden for Banks

    ECB published input of the European System of Central Banks (ESCB) into the EBA feasibility report on reducing the reporting burden for banks in EU.

    September 21, 2020 WebPage Regulatory News
    News

    EC Deems UK Framework for CCPs Temporarily Equivalent to EMIR Rules

    EC adopted a decision determining, for a limited period of time, that the regulatory framework applicable to central counterparties, or CCPs, in the UK and Northern Ireland is equivalent to the requirements laid down in the European Market Infrastructure Regulation (EMIR or Regulation 648/2012).

    September 21, 2020 WebPage Regulatory News
    News

    EBA to Phase Out Guidelines on Loan Repayment Moratoria

    EBA has decided to phase out the guidelines on legislative and non-legislative moratoria of loan repayments, in accordance with the earlier specified end of September deadline.

    September 21, 2020 WebPage Regulatory News
    News

    EBA Provides Opinion on Definition of Credit Institution in CRR

    EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).

    September 18, 2020 WebPage Regulatory News
    News

    ECB Finalizes Methodology to Assess CCR and A-CVA Risk of Banks

    ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.

    September 18, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5820