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Technical expert group on sustainable finance (TEG), SCHEER review of the JRC report on technical assessment of nuclear energy with respect to the do no significant harm criteria of Regulation (EU) 2020/852 (Taxonomy Regulation), Opinion of the Group of Experts referred to in Article 31 of the Euratom Treaty on Joint Research Centres report technical assessment of nuclear energy with respect to do no significant harm criteria of Regulation (EU) 2020/852 (Taxonomy Regulation'), This site is managed by the Directorate-General for Financial Stability, Financial Services and Capital Markets Union, Follow the European Commission on social media, Expert groups, comitology and other committees, Supplementary supervision of financial conglomerates, International Platform on Sustainable Finance, Equivalence of non-EU financial frameworks, action plan on financing sustainable growth, first delegated act on sustainable activities for climate change adaptation and mitigation objectives, Commission Communication on EUtaxonomy, corporate sustainability reporting, sustainability preferences and fiduciary duties: Directing finance towards the European green deal, Delegated Act supplementing Article8 of the Taxonomy Regulation, technical report on the do no significant harm aspects of nuclear energy, Group of Experts on radiation protection and waste management under Article31 of the Euratom Treaty, Scientific Committee on Health, Environmental and Emerging Risks, Technical Expert Group (TEG) on sustainable finance, excel tools to help users of the Taxonomy to implement it in their own activities, early feedback report published in December2018, responses to the second round of feedback on the June2019report, joint document with frequently asked questions. Towards the end of 2021, as world leaders, civil society and environmental activists converged in Glasgow for the 26th session of the Conference of the Parties (COP 26) to the United Nations Framework Convention on Climate Change (UNFCCC) to discuss and debate the increasingly dire climate outlook and what that means for the energy transition, regulators in the EU and other jurisdictions have continued the Yeomans task of developing frameworks and rules pursuant to which companies and financial firms will have to report on their contributions (or not) to green activities. [45] Germany in particular was a strong supporter towards its inclusion in the taxonomy, moreover advancing a request to the Commission to further ease environmental restrictions on its use. With specific regard to the Complementary Climate Delegated Act which included nuclear and gas in the taxonomy, during the consultations the PSF gave a negative feedback, while different positions have been expressed within the MSEG by different Member States. Informal Commission Expert Group", "Rules of Procedure of the Member States Expert Group on Sustainable Finance", "Members and Observers of the Platform on Sustainable Finance Overview of plenary and subgroups", "The Quest for Legitimacy in EU Secondary Legislation", "The EU's green finance taxonomy: an Orwellian mechanism", "Fury in Parliament as EU green taxonomy deadline expires", "EU Sustainability Taxonomy for non-financial undertakings: summary reporting criteria and extension to SMEs", "Banking progress. The final report on the 'EU Taxonomy for Sustainable activities' was published by the Technical Expert Group (TEG), commissioned by the European Commission. The EU Taxonomy is a classification system for determining which economic activities are environmentally sustainable or Taxonomy eligible. Different means can be required for an activity to make a substantial contribution to each objective. Sustainable finance taxonomy - Regulation (EU) 2020/852 Law details Information about the Regulation (EU) 2020/852 (Taxonomy) on the establishment of a framework to facilitate sustainable investment Amending and supplementary acts Implementing and delegated acts European Commission Taxonomy for sustainable activities Works in view of the establishment of an EU classification system for sustainable activities, i.e. The Taxonomy Regulation is mandatory to certain . The EU Taxonomy, a classification system for environmentally sustainable economic activities, was published in the Official Journal of the European Union on 22 June and entered into force on 12 July, 2020. The taxonomy is not finished. MAC. In order to inform its work on the action plan, including on the EUtaxonomy, the European Commission established a Technical Expert Group (TEG) on sustainable finance in July2018. It forms part of the EU's plan to scale up sustainable investment and implement the European green deal. The EU Taxonomy Regulation, which is part of the wider EU sustainable finance initiative, set out a classification system, the EU Taxonomy, for economic activity according to EU climate action goals. -EU. The event 'EU Taxonomy For Sustainable Activities: Incentivising Europe's Enablers Of The Green Transition' by the Sustainable, Long-term Investments & Competitive European Industry Intergroup took place on 15 March 2022. . The EU Taxonomy for Sustainable activities Disclosure requirements and implications for corporates 2021 ends with some major developments in the EU taxonomy and sustainability reporting. For those who wish to rely on the EU taxonomy, there is a provision of attainable and consistent objectives which provides a common understanding of what green economic activities are and therefore part of the EU environmental goals. The criteria for the specific gas and nuclear activities are in line with EUclimate and environmental objectives and will help accelerate the shift from solid or liquid fossil fuels, including coal, towards a climate-neutral future. By improving soil properties, it supports climate change adaption. To cite another example from the same Delegated Act, the manufacture of cement is considered as taxonomy-aligned if the specific GHG emissions from production are lower than 469kg CO2e per ton of cement manufactured (3.7). The EU taxonomy for sustainable activities is a grand experiment. The rules aim to establish a uniform understanding of the sustainability of business activities in the EU. This delegated act specifies the content, methodology and presentation of information to be disclosed by financial and non-financial undertakings concerning the proportion of environmentally sustainable economic activities in their business, investments or lending activities. What is the EUtaxonomy and how will it work in practice? The EU Taxonomy for Sustainable Activities is a major pillar of the bloc's strategy to mobilise the necessary finance and achieve the targeted reduction. In order to direct private financing, there are two approaches chosen by the EU: One is carbon pricing. What is the EUtaxonomy Article8 Delegated Act and how will it work in practice? In the delegated act, certain activities in the gas and nuclear sector are included in the taxonomy as transitional activities substantially contributing to climate change mitigation. Jan is a member of the firms Anti-Corruption and Internal Investigations and Sanctions, Export Controls & Anti-Money Laundering practice groups. The Taxonomy Regulation establishes 6 environmental objectives: Climate change mitigation Climate change adaptation The sustainable use and protection of water and marine resources The. With 328 against and 278 in favour of the resolution, MEPs failed to block the proposal. The inclusion of such activities follows the publication of two reports, one from the TEG in 2019 and the second from the Joint Research Committee (JRC), in 2021, as well as consultations with the PSF and the Member States Expert Group, that led to different conclusions. Consortium e.V. EU Taxonomy for Sustainable Activities 17 September 2020 Sustainable Finance has a key role to play in mobilising the necessary capital to deliver on the policy objectives under the European Green Deal as well as the EU's international commitments on climate and sustainability objectives. As noted above, the CSRD would amend the NFRD and expand the reporting obligation under the EU Taxonomy to all large companies and all companies listed on regulated markets (except listed micro-enterprises). The rest of the carbon is converted into bioenergy. As the first step, the Joint Research Centre, the in-house science and knowledge service of the Commission, drafted a technical report on the do no significant harm aspects of nuclear energy. It establishes the basis for the EUtaxonomy by setting out 4overarching conditions that an economic activity has to meet in order to qualify as environmentally sustainable. [47], FORATOM, representing the European nuclear industry, welcomed the inclusion of nuclear activities in the Taxonomy, arguing at the same time that it shouldn't be considered just as a transitional activity, and pushed for nuclear to be part of the EU energy mix beyond 2050. [42], Regarding natural gas, in the same report the PSF suggested to maintain only the criteria setting a certain threshold for GHG emissions, leaving door open for some of the activities generating higher emissions to be considered as "intermediate transition"- even though still not sustainable - activities, but only under an additional extended taxonomy. The EU Taxonomy is a classification tool aimed at investors, companies and financial institutions to define environmental performance of economic activities across a wide range of industries, and sets requirements corporate activities must meet to be considered sustainable. Please see www.deloitte.com/about to learn more. Pyrolysis even allows the utilization of biomasses that are unsuitable for energy production by combustion and that are commonly considered waste streams. It establishes the basis for the EU taxonomy by setting out 4 overarching conditions that an economic activity has to meet in order to qualify as environmentally sustainable. On 9March2022, the Commission adopted a Complementary Climate Delegated Act including, under strict conditions, specific nuclear and gas energy activities in the list of economic activities covered by the EUtaxonomy. A loan or other financial asset is considered as taxonomy-aligned if it finances an activity that fulfills the taxonomy criteria. [23] On the 31st of August, the Nordic Circular Hotspot arranged a digital seminar on the EU taxonomy, its definition and the likely impacts it will have on the Nordic region (and beyond). Companies in Europe need to prepare for the first version of Taxonomy reporting in their 2022 annual or sustainability reports. Understanding the EU Taxonomy for sustainable activities 20/01/2022 by Harald Bier The Taxonomy Regulation provides companies, investors and policymakers with definitions of economic activities that can be considered environmentally sustainable, in order to direct private investments toward them. Fundamentally, the taxonomy is a common language intended to reflect scientific consensus on what is (and, by omission, what is not), a sustainable activity. It was, among other things, built out of the very legitimate concern surrounding greenwashing i.e., reporting to the market that activities are sustainable or environmentally friendly, when they are in fact not, and/or misrepresenting the scope or percentage of such activities in light of their overall activities. This redirection of investment flows could significantly accelerate the adoption climate-friendly technologies or the scale-up existing ones. Welcome to CCI. Although the IPCC assesses Biochar / PyCCS as one necessary solution to address climate change, it was NOT included in the Taxonomy. Aside the 6 environmental objectives, the EU taxonomy also set forth four (4) requirements to be met by an economic activity in order to be taxonomy oriented:[19]. He has designed and audited compliance programs, performed internal investigations and due diligence reviews on third-party agents and joint-venture partners around the world, including in connection with the U.S. Department of Justice (DOJ), the U.S. Securities & Exchange Commission (SEC), the French Parquet National Financier (PNF) and anticorruption agency (AFA), the U.K. Serious Fraud Office (SFO), as well as multilateral development bank (MDB) and export credit agencies (ECAs) inquiries. The EU Taxonomy provides a definition for what it means to be a sustainable activity and is a huge step in the right direction to prevent greenwashing and unlock green finance. Commission Delegated Regulation (EU) 2022/1214 (the 'Complementary Delegated Act') sets out the technical screening criteria for climate change mitigation and climate change the Platform on Sustainable Finance (PSF), This page was last edited on 2 August 2022, at 11:11. an EU taxonomy. This is a prerequisite for sustainable investments (e.g. Protection and restoration of biodiversity and ecosystems. The EU Taxonomy is a classification system for sustainable economic activities. The EU Sustainable Finance Taxonomy (shortened to the Taxonomy), or Regulation (EU) 2020/852 is a sustainability classification system for economic activities and sectors essential to climate change mitigation and adaptation. . The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. (Please see website for full position .) [30] It helps companies who are subject to disclosure requirements under art.8 of the Taxonomy Regulation, to translate technical screening criteria into Key Performances Indices[31] with regard to turnover, capital expenditure and operating expenditure. Opponents, however, claim that rewarding companies involved in such activities by allowing them to fall within the taxonomys scope delays the needed decrease in emissions to meet the Paris targets and (again, particularly with nuclear), ignores the harmful waste side effects of such activities. Since the entry into force of the Regulation, the Commission has adopted two delegated acts, plus a third that has been approved in principle, but not yet adopted. A so called Climate Delegated Act (2021/2800) mentions criteria and technologies the EU Commission considers sustainable. The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". The objective of the Taxonomy is to prevent "greenwashing" and to reduce information asymmetry between the reporters and the users of the reports. complying with minimum social safeguards. These cookies ensure basic functionalities and security features of the website, anonymously. [24] A vote to reject this Act in the EP failed to obtain the required majority. The Market Advisory Council (MAC) delivered recommendations to the European Commission on the EU Taxonomy for Sustainable Activities and Draft Technical Screening Criteria for Fishing Activities. It was published in June 2020 and will have a significant impact on the climate strategies of corporates and institutions. While gas and nuclear have succeeded in getting a step closer to finding large investments in new fossile power plants, there are truly climate-positive energy sources that have been neglected. Green, or 'environmentally sustainable', economic activities are described as those which . Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet. For the objective of climate change mitigation, for example, an activity is considered as sustainable if it substantially contributes to keeping the average global temperature increase from pre-industrial levels to below 2 degrees Celsius (with the ambition of keeping it to 1.5 degrees Celsius, as set out in the Paris Agreement). For a company or financial market participant to describe its activities as "taxonomy-aligned," the activities must make a "substantial contribution" to at least one of these six objectives and must "do no significant harm" to the other categories. The report was reviewed by a Commission Expert Group (the Member States' experts on radiation protection and waste management, the so-called "art.31 experts group") which assessed it positively, while the Scientific Committee on Health, Environmental and Emerging Risks (SCHEER) criticized the approach used to assess the compliance with the "do not significant harm" principle. Commission's Taxonomy of sustainable activities" Available here. Should these technologies be accepted as sustainable investments in the EU Taxonomy, they would be eligible for very favorable financing terms. [4] Sustainable finance is one of the main pillars of the EU Green Deal and requires the private sector and investors in general to divert their financing towards a green transition. [52] The economy and energy minister of these countries published a joint opinion article on the 11th October 2021 to defend the role of nuclear power in the fight against climate change. It includes technical criteria that must be complied with in order for an activity to be considered sustainable. The cookie is used to store the user consent for the cookies in the category "Analytics". [57], The main actors involved in the lawmaking process, Debate over natural gas and nuclear energy, Corinne Raux and Sverin Fischer, "Testing the application of the EU Taxonomy to core banking products: High level recommendations", January 2021. [2] The complementary delegated act builds on the Commission Communication referred to above and on the assessment of nuclear energy mentioned below. Both reports were subject to an open call for feedback to gather views from stakeholders. Pyrogenic carbon is the material that can be the basis for a carbon-based economy of the future, after the phasing out of fossil resources. The European Commission followed through on this action in May 2018 with a proposal for a regulation on the establishment of a framework to facilitate sustainable investment (Taxonomy regulation). To avoid this, it defines technical criteria across six environmental objectives: For a company or financial market participant to describe its activities as taxonomy-aligned, the activities must make a substantial contribution to at least one of these six objectives and must do no significant harm to the other categories. The Taxonomy became legally binding in 2021. In 2021, the E.U. Augustinerplatz 2 Sustainable use and protection of water and marine resources. The first one, the EU Taxonomy Climate Delegated Act, was adopted in June 2021 and published on the Official Journal in December of the same year. The EBI is working towards a favorable legislation, adequate industry standards, precise market analysis and a coherent communication on pyrolysis and biochar, particularly on a EU level. [13], In spite its potential to providing a sustainable finance to its proponents, the EU Taxonomy remains a voluntary action. [2] The UK is working on its own separate taxonomy.[3]. the Technical Expert Group on sustainable finance (TEG). Disclosure requirements are laid down in the annexes of the delegated act, and they may differ depending on the nature of the entity (financial, non-financial undertakings), between financial entities (asset managers, credit institutions, investment firms, insurance and reinsurance companies). [51], On the other hand, France is promoting the inclusion of nuclear power into the taxonomy, supported by Bulgaria, Croatia, Czechia, Finland, Hungary, Poland, Romania, Slovakia and Slovenia. In this article you can read about the taxonomy and how it is likely to affect municipal activities and investments. [39], On the other hand, the report published by the JRC concluded that, with currently available technologies and under the current regulatory framework, the impact of nuclear energy would remain below harmful levels. The current COVID-19 pandemic has reinforced the need to redirect money towards sustainable projects in order to make our economies, businesses and societies in particular health systems, more resilient against climate and environmental shocks. - find the answers to these and more questions in the attached file. The EU Taxonomy is a strategy to create a harmonized understanding of what actually consitutes sustainable activities across the European Union. 2021 ends with some major developments in the EU taxonomy and sustainability reporting. This Communication builds on the transition finance report adopted by the Platform on Sustainable Finance in March2021. The taxonomy is a science-based classification system aimed at providing the sought-after definitions for sustainable activities. [27] Similar concerns were expressed by the EP, which also complained for not having been given enough time to scrutinize the third DA.[28]. Under the Taxonomy Regulation, the Commission had to come up with the actual list of environmentally sustainable activities by defining technical screening criteria for each environmental objective through delegated acts. 22 March 2022 By Platform Credits: EnvatoElements The European Commission has launched the EU Taxonomy for Sustainable Activities, a classification system for establishing what counts as a sustainable investment, which will influence investment strategies in both public and private sectors. The U.N. Principles for Responsible Investment (PRI) an independent body of signatories committed to responsible investing has helpfully released a report highlighting the efforts of 40 financial market participants to implement the taxonomy within their investment activities. In their own words; the EU Taxonomy "is a tool to help investors, companies, issuers and project promoters navigate the transition to a low-carbon, resilient and resource-efficient economy.". [4] The European Green Deal is based on the European Action Plan with the aim of strengthening sustainable growth funds, with the goal of reorienting capital flows towards sustainable investment. an EU taxonomy From action plan to Taxonomy Regulation The Commission put forward the action plan on financing sustainable growth in March 2018. Depending on feedstock and pyrolysis process control, biochar can be used in agriculture as a feed amendment to improve animal welfare, as a compost amendment avoiding nutrient leaching and non-CO2 greenhouse gas emission and a soil conditioner. The taxonomy is a key part of the EU Sustainable Finance Action plan, a landmark strategy aiming to contribute to the bloc reaching its European Green Deal targets of transforming the EU into a net zero emitter by 2050. Questions and Answers: Taxonomy Climate Delegated Act and Amendments to Delegated Acts on fiduciary duties, investment and insurance advice. [36] The TEG final report was accompanied by a technical annex, which contains an updated methodology for assessing the "substantial contribution" of an economic activity to climate change mitigation, updated technical screening criteria, and new criteria regarding activities whose inclusion in the taxonomy may be taken into account in the future. The taxonomy defines criteria for around 80 economic activities, which an activity must fulfill to be classified as sustainable (Lucarelli et al., 2020). The publication of the first delegated act was accompanied by the adoption of a Commission Communication on EUtaxonomy, corporate sustainability reporting, sustainability preferences and fiduciary duties: Directing finance towards the European green deal that aimed at delivering key messages on how the sustainable finance toolbox facilitates access to finance for the transition. [18] During its mandate, the TEG also engaged with over 200additional experts to develop their recommendations for the technical screening criteria. From January 2022, financial market participants are required to report how and to what extent their . Even if certain large multinationals and non-E.U. 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