The European Commission says the sustainable finance taxonomy designed for institutional investors could be applicable to the public sector, i.e. local governments.
It’s one of a string of elements in the EU’s plan to mobilize €1trn of investment towards the green economy, under the ‘European Green Deal Investment plan’ announced yesterday.
The taxonomy, a centrepiece of the bloc’s Sustainable Finance Action Plan, was signed off late last year after months of political wrangling.
Now, top EU officials are suggesting a wider application for the taxonomy, which aims to define what is sustainable.
“We will explore how this taxonomy can be used not only in private but also in the public sector, and later this year we will follow it up with a renewed sustainable finance Action Plan,” Executive Vice-President Valdis Dombrovskis told the European Parliament’s plenary session in Strasbourg.
The official communication from the European Commission said: “While initially designed for private investors, the taxonomy – once sufficiently developed – could also be used by public sector entities.
“It is important that there is convergence of standards between the private sector and the public banks/entities, for example the European Investment Bank.”
"Honourable members, putting economic, environmental and social sustainability at the heart of policy requires a change of the mindset. We have taken an important step towards achieving this today."
Also planned is an annual “Sustainable Investment Summit with all stakeholders”, an opportunity to take stock of progress on the European Green Deal Investment Plan and “identify new avenues for action.”
There are also plans to establish an EU Green Bond Standard in 2020 as well as the launch of a public consultation on a renewed sustainable finance strategy, in the first quarter of this year, “with the view to presenting a renewed strategy in the third quarter of 2020”.
There are also moves to integrate sustainability further into public procurement. The Commission says it will propose “minimum mandatory green criteria or targets” for public procurements in sectorial initiatives, EU funding or product-specific legislation.
It added: “Such minimum criteria will ‘de facto’ set a common definition of what a ‘green purchase’ is, allowing collection of comparable data from public buyers, and setting the basis for assessing the impact of green public procurements.”
Another feature of the plans is a €100bn Just Transition Mechanism, to help workers affected by the shift to a green economy. Speaking alongside Dombrovskis, fellow Executive Vice President Frans Timmermans said it was a “message to coal miners in Asturias, Western Macedonia or Silesia”.
“To the peat harvesters in the Irish Midlands. Baltic regions reliant on oil shale, and many more.”
Dombrovskis told MEPs: “Honourable members, putting economic, environmental and social sustainability at the heart of policy requires a change of the mindset. We have taken an important step towards achieving this today.”
Meanwhile, State Street Global Advisors has published a guide to the new EU climate benchmarks under the EU Action Plan. The EU Climate Transition Benchmark (EU CTB) and EU Paris-Aligned Benchmark (EU PAB) and benchmark administrators must comply with the new requirements by April 30.