Council of the EU: Sustainable finance - Council agrees position on a unified EU classification system

25 September 2019

The EU is taking steps to implement its strategy on financing sustainable growth and the transition to a low-carbon, resource-efficient economy. At present, there is no common classification system at EU or global level which defines what is an environmentally sustainable economic activity.

EU ambassadors today greenlighted the Council's position on a proposal to create an EU-wide classification system, or "taxonomy", which will provide businesses and investors with a common language to identify what economic activities can be considered environmentally sustainable.

"Private sector participation is absolutely crucial in addressing the challenges posed by climate change. Hundreds of billions euros of investment are required to achieve the transition to a sustainable economy and it is clear the capital needed cannot come from public budgets alone. In order to help investors contribute to the transition, a first important step is to have a shared understanding of what "sustainable" means."
Mika Lintilä, minister of finance of Finland

Two challenges of the proposed regulation:

• reduce fragmentation resulting from market-based initiatives and national practices;
• reduce "greenwashing", i.e. the practice of marketing financial products as "green" or "sustainable", when in fact they do not meet basic environmental standards.

Full press release

© European Council