Sustainable finance – EU taxonomy: A framework to facilitate sustainable investment

Briefing 27-07-2020

In March 2018, the European Commission presented an action plan on sustainable finance, in order to facilitate investments in sustainable projects and assets across the EU. In May 2018, the Commission put forward a package of three proposals, including measures to create a sustainable taxonomy for the EU; provide clarity on how environmental, social and governance factors can be taken into account for investment decisions; and establish low-carbon benchmarks. The first proposal focuses on establishing a common language for sustainable finance (e.g. a unified EU classification system, or taxonomy) through a framework of uniform criteria, as a way to determine whether a given economic activity is environmentally sustainable. On 11 March 2019, the ECON-ENVI joint committee adopted a report on the Commission proposal, calling for a number of changes. On 28 March 2019, the Parliament adopted its position at first reading. After interinstitutional negotiations, on 17 June 2020, the Parliament adopted the compromise text at second reading. The final act was published in the Official Journal on 22 June, and applies as of 12 July although certain provisions apply only as of January 2022 or January 2023. Third edition. The 'EU Legislation in Progress' briefings are updated at key stages throughout the legislative procedure.