EU governments back groundbreaking law to stop greenwashing of finance

European governments this morning overturned their earlier opposition to new rules for which financial investments can be labelled environmentally sustainable. France and the UK weighed in behind the draft ‘green finance’ regulation after attempting to block it last week. New text has since been added to clarify that the criteria will be technology neutral.[1] Green transport group Transport & Environment (T&E) said the EU green ‘taxonomy’ regulation will be a cornerstone of sustainable finance that will help channel investments towards a new clean economy.

Luca Bonaccorsi, director of sustainable finance at T&E, said: “More than 130,000 Europeans told governments to stand firm against greenwashing of financial services, and today they finally delivered for their citizens. The EU’s green standard will mean people can no longer be sold fake green investments, and money can instead flow to sustainable businesses like electric mobility and renewables. It is the most progressive piece of financial legislation in the world.”

The regulation sets a legal framework for the EU’s taxonomy of environmentally sustainable activities to be based on scientific evidence rather than political compromises. It will cover all investments and require financial actors, including fund managers, the issuers of bonds and listed companies, to disclose how green their investments are.

Once the EU’s climate taxonomies are published in 2021, they will be the most advanced and credible standard for green finance in today’s global capital markets. T&E said that with this regulation the EU establishes its leadership in the fight to re-direct capital flows towards environmentally sustainable activities and to end greenwashing of financial products.

Leading MEPs still need to review the agreement but are expected to green-light the text this evening. Member states’ ambassadors are due to rubber-stamp it on Wednesday.

However, once the regulation is formally approved, the actual list of environmentally sustainable activities still needs to be drawn up by the Commission based on recommendations from a Technical Expert Group – made up of NGOs, financial market companies and EU agencies. Civil society groups are expected to closely scrutinise this process to ensure that only truly sustainable investments make the cut.

Luca Bonaccorsi concluded: “Now everyone’s focus will be to make sure the list of environmentally sustainable activities and their 'thresholds' are science based. A swarm of special interests will try to rewrite these rules behind closed doors, but civil society groups and thousands of concerned citizens will be keeping a very close eye.”

Note to editors:

[1] By making the criteria technology neutral, all energy sources/technologies would have to meet the same thresholds. For example, a set number of grams of CO2 emissions per kilowatt hour.

Contact the press team

Nico Muzi
Communications Director
+32 (0)484 27 87 91 
nico.muzi@transportenvironment.org

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