EC Expert Group Outlines Tools for Recovery from COVID-19 Pandemic

The Group states that scientists have warned that loss of biodiversity and disease outbreak are closely related and to expect a volatile climate as a result of human contribution to climate change. As plans for economic recovery from the COVID-19 pandemic are being prepared, governments and the private sector must be attentive to the details of what a resilient, sustainable, and fair recovery looks like in practice—to ensure greater resilience to further environmental and social crises ahead. The Expert Group has developed three tools that can guide both government and private-sector plans: 

• The Sustainable Taxonomyprovides a framework for future recovery measures. It shows the environmental performance and minimum social standards that are necessary for economic activities to reach climate and environmental goals, including climate neutrality by 2050 and ambitious 2030 targets. The Taxonomy is particularly relevant for new investments, which are needed to transition economy, showing how and where to cut carbon emissions, build climate resilience, optimize supply chains toward sustainability, and stimulate jobs.
• The Green Bond Standard, which presents a best practice model and the elements of which can be applied by all bond issuers to explain how their funding contributes to the wider sustainability strategy and resulting environmental and social impact of the issuer. The framework of the Green Bond Standard can also be applied to increase transparency of social impact and outcomes of finance.
• The Paris-Aligned and Climate Transition Benchmarks are tools to support allocation of a large amount of private capital toward climate transition. They do so by aligning the portfolio selection of investors with the climate change objectives.

The statement highlights that members of the European Council identified the central role of the Green Deal in its Roadmap for Recovery from the COVID-19 pandemic. The Green Deal includes 2050 climate neutrality and a pending 2030 climate goal. These climate goals must be used to calibrate recovery responses. Recovery plans should not support environmentally or socially harmful activities, which would worsen the current and future crises, locking in highly polluting infrastructure or promoting activities that do not contribute to social well-being for decades to come. According to the Expert Group, the private sector also has a clear role in ensuing access to finance in a sustainable recovery. Private-sector plans must be transparent and clear on their alignment with the environmental and social objectives to increase the effective targeting of public recovery measures.

Related Link: Statement

Keywords: Europe, EU, Banking, Insurance, Securities, Green Deal, Climate Change Risk, COVID-19, ESG, Sustainable Taxonomy, Climate Transition Benchmarks, Climate Neutrality 2050, Sustainable Finance, EC