Sustainable finance – EU taxonomy: A framework to facilitate sustainable investment [EU Legislation in Progress]

Written by Stefano Spinaci (2nd edition),

Businessman presenting a sustainable development concept with office buildings backgrounds

© NicoElNino / Fotolia

In March 2018, under its capital markets union project and as part of a broader initiative on sustainable development, the European Commission presented an action plan on sustainable finance, in order to facilitate investments in sustainable projects and assets across the EU. On 24 May 2018, the Commission put forward a package of three proposals, including measures to create a sustainable taxonomy for the EU; provide clarity on how environmental, social and governance factors can be taken into account for investment decisions; and establish low-carbon benchmarks.

The first proposal focuses on establishing a common language for sustainable finance (e.g. a unified EU classification system, or taxonomy) through a framework of uniform criteria, as a way to determine whether a given economic activity is environmentally sustainable. On 11 March 2019, the ECON-ENVI joint committee adopted a report on the Commission proposal, calling for a number of changes. On 28 March 2019, the Parliament adopted its position at first reading. On the other hand, the Council is continuing to review the Commission’s proposal.


timeline 10 steps trilogue with second reading

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