An EU taxonomy is needed for eu climate targets to be achievable in practice. It is a classification system that allows the categorization of economic activities/sectors that play a key role in climate change mitigation and adaptation. To be included in the taxonomy proposed by the EU, an economic activity must contribute significantly to at least one environmental objective and not “seriously harm” the other five environmental objectives set out in the legislative proposal. The classification is based on technical screening criteria, methods and guidelines described in the EU Taxonomy Report prepared by the EU TEG, as well as extensive stakeholder consultations, with the participation of many experts from the sectors covered by the taxonomy. Work towards the establishment of a Community system for the classification of sustainable activities, i.e.: an EU taxonomy For the other four environmental objectives, the taxonomy should be set by the end of 2021 and apply until the end of 2022. The development of the EU taxonomy will take place through a new sustainable funding platform, which is expected to go live in autumn 2020. The first company reports and investor data from the EU taxonomy are due in early 2022. On 9 March 2020, the TEG published its final report on the EU taxonomy. The report contains recommendations on the overall EU taxonomy, as well as extensive implementation guides on how companies and financial institutions can use and disclose the taxonomy. In July 2018, the European Commission set up a Technical Expert Group (TEG) on sustainable finance to inform its work on the Action Plan, including the EU taxonomy. The EU TECHNICAL EXPERT GROUP on Sustainable Finance (TEG) is currently completing its work on some actions of the EU Sustainable Finance Action Plan. Taxonomy is one of them and is linked to other measures with which the EU TEG has cooperated.
The European Parliament has already formulated its position on the legislative proposal on taxonomy and the next step will be to reach an agreement with the Commission and the Council. The resulting Directive will be transposed into future regulations at national level. In March 2018, the Commission presented the Action Plan for Financing Sustainable Growth. Action 1 of the Action Plan calls for the establishment of an EU classification system for sustainable activities, i.e. an EU taxonomy. The European Commission implemented this measure in May 2018 with a proposal for a Regulation establishing a framework to facilitate sustainable investments (Taxonomy Regulation). 5www.unpfi.org/banking/high-level-recommendations-on-the-voluntary-application-of-eu-eu-taxonomy-to-core banking-products 2 Taxonomy: final report of the Technical Expert Group on Sustainable Finance, EU Technical Expert Group on Sustainable Finance, March 2020 ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/200309-sustainable-finance-teg-final-report-taxonomy_en.pdf 18 December 2019 the Council and the Union Parliament reached political agreement on the Regulation on Taxonomy. . .