Ecology, EU – Baltic States, Financial Services, Modern EU
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Friday, 29.03.2024, 05:52
“Green financing”: creating durable, effective and sustainable solution
The agreement “creates a common language” between the two EU
institutions (an executive and legislative) to make all kind of investors be
safe and effective while investing in projects and economic activities that
have a substantial positive impact on the climate and the environment. Besides,
this political agreement underlines the EU's commitment to implementing the
2015-Paris Agreement and reach climate-neutrality by 2050.
The political agreement is part of the Commission's Action
Plan on financing sustainable growth and is an integral part of the Capital
Markets Union's efforts to connect finance with the needs of the real economy.
It will both allow investors to rely on “green investment” structures and
activate private capital for the sake of green transition.
Environmentally sustainable economy
The EU action plan on sustainable finances was adopted by
the European Commission in March 2018 with three main objectives: a) reorient
capital flows towards sustainable investment, in order to achieve sustainable
and inclusive growth; b) manage financial risks stemming from climate change,
environmental degradation and social issues; and, c) foster transparency and
long-term financial and economic activity.
More in: https://ec.europa.eu/info/publications/180308-action-plan-sustainable-growth_en
The present agreement –for the first time in the EU
“financial services” – makes a common classification system (taxonomy) which provides
a definition of “environmentally sustainable” economic activities. The aim of
this green list (taxonomy) is to: a) reduce fragmentation resulting from
market-based initiatives and national practices, and b) reduce "green-washing",
i.e. the practice of marketing financial products as "green" or
"sustainable", when in fact they do not meet basic environmental
standards.
The political agreement sets out a general framework for
what can be classified as an “environmentally sustainable economic
activity”. Notably, it sets out the following six environmental
objectives: climate change mitigation and adaptation; sustainable use and
protection of water and marine resources; transition to a circular economy; pollution
prevention and control; protection and restoration of biodiversity and ecosystems.
Four main requirements define the economic activities in compliance
with the “green list”: a) activities that provide a substantial contribution to
at least one of the mentioned “environmentally sustainable activities”; b)
providing “no significant harm” to any of the mentioned objectives; c)
activities that comply with robust and science-based technical screening
criteria; and, d) complied with minimum social and governance safeguards.
EU institution’s opinion
In the European Commission’s welcoming note, the agreement was
praised as assisting (“scale-up” in the Commission’s words) private and public
investments to finance the transition to a climate-neutral and green economy,
redirecting capital to economic activities and projects that are truly
sustainable.
The Commission Executive Vice-President Valdis Dombrovskis
(responsible for “Economy that Works for People”), noted that a corresponding legislation would be “a game-changer in
terms of tackling climate change, because it will enable billions in green
investments to flow”. He underlined that for the first time in the EU banking
and financial sectors “green list taxonomy” would have a precise definition and
thus would give a real boost to sustainable investments and be crucial for the
implementation of the European Green Deal.
Source: https://ec.europa.eu/commission/presscorner/detail/en/IP_19_6793
More on “green deal”
in: “Green Deals’” final approval: great days for Europe. In:
http://www.baltic-course.com/eng2/modern_eu/?doc=153069;
and EGD’s postponement until summer 2020. In: http://www.baltic-course.com/eng2/modern_eu/?doc=153093;