Parliament approves updated sustainable finance deal and makes it final

17 December 2019
by WWF -- last modified 17 December 2019

Opening the door to cleaner finance in Europe, the European Parliament last night approved the slightly modified version of the deal on the EU sustainable investment taxonomy, which had been agreed earlier yesterday by Member States.

The previous painstakingly negotiated version was had been blocked by nine countries in the Council, which met again yesterday to endorse a slightly different version with three additional amendments, which focus on the climate mitigation objective (Art 6) and the Do No Significant Harm clause (Art 12).

As a result the modified version of the deal went back to the Parliament, which endorsed it yesterday evening.

Sébastien Godinot, Economist at WWF European Policy Office said:
"We are very pleased that the Parliament chose the best option at this point in time: approving the deal and thus finalising the long and difficult negotiation process once and for all. The final result is a robust and balanced deal ensuring that the taxonomy will be built on climate and environmental science – a must for this critical part of the EU sustainable finance agenda. This is good news for the many EU citizens, stakeholders and policy makers who want to move forward, as required by climate science".

The deal includes the following key elements:

• Taxonomy covering three categories of activities: sustainable / enabling / transition (and separate disclosure compulsory for each);
• Mandatory disclosure for all financial products, such as pension schemes (with an opt out clause for non-green products);
• Mandatory disclosure for 'large' companies (with more than 500 employees), under the scope of the Non-Financial Reporting Directive;
• Entry into application by end 2021 for climate objectives, and end 2022 for other environmental objectives;
• Sound governance of the taxonomy with the Commission required to draft technical screening criteria for each sector, and a Member States Expert Group providing input;
• A review clause to potentially add a 'brown' category (non-sustainable activities);
• Supervision by National Competent Authorities.

The taxonomy deal must now be finally endorsed by the Member States ambassadors to the EU tomorrow (COREPER II), and then by the plenary of the Parliament (likely in January 2020), but it is assumed that these two final steps will not reopen the file content-wise.

The European Policy Office helps shape EU policies that impact on the European and global environment.

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