“We need to have a common definition or language when we’re talking about sustainable investment. We should see the taxonomy as the floor on which we want to build an ecosystem of disclosure obligations, labels and benchmarks,” said Guersent.
He went on to explain that the Commission’s aim is for the taxonomy to provide the international market with information to help it self-direct towards sustainable investment.
In the EU, the taxonomy will only be imposed on [EU] member states and public institutions, and market players who market themselves as being sustainable, or green. For others in the EU and around the world, it is available as an information tool to help investors make decisions on how and where to invest.
In addition to its Technical report, the TEG has also published a supplementary report on using the taxonomy. This provides investors and companies with a concise and clear explanation of why the taxonomy is needed, what it looks like, and its ease of use.
The challenges of implementation
Guersent identified a need for greater trust between different actors in a fragmented international market and a common understanding about what constitutes sustainable investment.
He also suggested that making the shift from short to long term thinking and aligning the 2030 Climate and Energy Framework’s goal of reducing emissions with the long-term strategy to reach carbon neutrality by 2050 will prove challenging for many businesses.
“Europe’s emissions represent 11 per cent of total greenhouse gases. This means that almost 90 per cent of the problem is elsewhere in the world, particularly in developing/emerging countries,” said Guersent.