What is the EU’s taxonomy for sustainable activities?

This is not new: we are currently experiencing a global environmental crisis for which it is urgent to act today. Everyone, at his or her own level, is doing his or her best to do something about it. However, many people are also surfing on this wave to store up more and more capital… Greenwashing’ is the term used to define the commercial practice of using often misleading environmental arguments to sell products that are not, most of the time, so green.

The video above, produced by the London news agency Reuters, explains in a simple and concise way what the European taxonomy is: its field of action, the targeted sectors, the criteria,…

Quite broadly, taxonomy is the science of classification. Launched by the Union in 2018, the idea of the EU Sustainable Finance Taxonomy is to create a classification for so-called ‘green’ economic activities. Based on environmental criteria, it will identify whether financial investments are in line with Greendeal objectives. Not a bad idea, is it?

However there is a ‘catch’… The rules for most sectors came into effect in February 2022 except for gas and nuclear power – obviously not everyone agreed to list these fuels as tools to help fight climate change. Now, despite opposition from activists, expert EU advisors, some investors and countries, it is done: the European Commission has classified these two fossil fuels as sustainable energy in the EU’s green taxonomy.

But in fact, what is its objective? Achieving carbon neutrality by 2050 will require lots of investments. Taxonomy is therefore a lever to push private investors to invest in ‘green’ funds. Of course, it does not prohibit investing in activities that are not qualified as ‘green’, but it defines those that are qualified as environmentally friendly – and it will therefore also limit ‘greenwashing’.

The green taxonomy regulation is based on 6 environmental objectives: reduction of greenhouse gas emissions, adaptation to climate change, transition to a circular economy, pollution control, protection of water resources, protection and restoration of biodiversity.

This new regulation will be fully implemented in 2023. Hopefully, it will allow the European Union to build a more sustainable and greener economy in the years to come.

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