As EU Green Taxonomy Takes Shape, Social, Harmful Investments Under Discussion

In an interview with Nathan Fabian, chairperson of the European Platform on Sustainable Finance, he discussed the building of the taxonomy and the final negotiations before it comes into practice in 2022. Challenges before the introduction include the development of criteria (with expectation of public feedback in mid-2021) and the possibility of creating a social taxonomy, as well as an additional criteria for identifying “significant harm” in order to create a richer continuum for evaluating performance levels. The social taxonomy will be designed differently with other types of disclosure on social factors like education, health, housing, and equitable/safe employment. The technical work on the platform has been finished, now the political phase is underway with European co-legislators negotiating, testing, and recommending criteria (with expectation of completion in May). He warns investors with portfolios in real estate and infrastructure will be asked for lots of data, built over time, especially if they are not Europe-based and already covered by nonfinancial reporting directives, creating legal obligations for ~7,000 listed companies. For other areas of the globe, he hopes for similar taxonomy frameworks even if they have different environmental goals, like the International Platform on Sustainable Finance with China, India, and the UK.

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