Sustainable Finance and EU Taxonomy: EU Commission unveils package of measures
On 21 April 2021 the European Commission adopted its much-anticipated sustainable finance package as part of its overarching Green Deal policy to help direct capital towards sustainable activities across the European Union. By enabling investors to steer investments towards more sustainable technologies and businesses, the ‘April Package’ intends to help the European Union reduce its greenhouse gas emissions by at least 55 percent by 2030 and reach its 2050 carbon neutrality goal. Being the first entity on a global stage adopting such a comprehensive set of measures, the EU will be a world leader in setting future standards for sustainable finance.
ZVEI supports the European Commission's efforts to make greenwashing more difficult and to define clear criteria for green investments. Yet, such an approach should be science-based and be technology-neutral to the extent possible. Given that electrical manufacturing provides enabling solutions that ultimately lead to a significant contribution to achieving the EU’s climate and energy goals, the newly created taxonomy should explicitly list electrical manufacturing as a sustainable activity contributing to climate and environmental objectives.
Amongst others, the package is comprised of the following dossiers with relevance for the electronics industry:
- The EU Taxonomy Climate Delegated Act. It aims to support sustainable investment by making it clearer which economic activities generally contribute to meeting the EU's environmental and climate objectives. The EU taxonomy is the first-ever classification system that spells out criteria for green investments at supranational level. According to the Commission, this legislative act would cover the economic activities of roughly 40 percent of listed companies, in sectors which are responsible for almost 80 percent of direct greenhouse gas emissions in Europe. It is noteworthy that the current draft still needs to be formally adopted and sent to the co-legislators of the European Union (the European Parliament and the Council of the EU) before it can enter into force.
- A proposal for a Corporate Sustainability Reporting Directive (CSRD). This proposal aims to improve the flow of sustainability information in the corporate world. It seeks/intends to make sustainability reporting by companies more consistent, so financial players, including investors as well the broader public, can use comparable and reliable sustainability information. Companies will have to report on how sustainability issues, such as climate change, affect their business and measure the impact of their activities on people and the environment.
In the context of the next 26th UN Climate Change Conference (COP26) in Glasgow, countries are setting ambitious climate targets, and there is an increased appetite for sustainable finance as well as a growing focus on the global convergence of standards – we clearly need a reliable framework for investments in low-CO2 technologies. The creation of a classification system will effectively set (global) standards as to what is regarded as sustainable and what is not.