The European Commission set up a Technical expert group on sustainable finance (TEG) to assist it in developing, in line with the Commission's legislative proposals of May 2018
- an EU classification system – the so-called EU taxonomy – to determine whether an economic activity is environmentally sustainable;
- an EU Green Bond Standard;
- methodologies for EU climate benchmarks and disclosures for benchmarks; and
- guidance to improve corporate disclosure of climate-related information.
The TEG commenced its work in July 2018. Its 35 members from civil society, academia, business and the finance sector, as well as additional members and observers from EU and international public bodies work both through formal plenaries and subgroup meetings for each workstream. To allow it to conclude its technical work and retain the expertise before the future Platform on sustainable finance is set up, the mandate of the TEG has been extended until 30 September 2020.
For more information about the TEG’s work and the legislative proposals that guide it, see also the frequently asked questions.
In order to present and discuss the final reports of the TEG on the EU taxonomy as well as further user guidance in relation to its recommendations for an EU Green Bond Standard, the Commission hosted a web-based stakeholder dialogue on 12 March 2020.
In its 26 April 2020 statement on the Covid-19 crisis (also available in French, Italian and Spanish), the TEG encourages governments and the private sector to use EU Taxonomy, the Green Bond Standard and the Climate Benchmarks as tools to ensure a 'resilient, sustainable and fair' recovery.
The TEG followed up to this statement on 15 July 2020 with a short paper outlining 5 high-level principles for recovery & resilience, focused on applying the taxonomy.
The TEG has been working on developing the EU taxonomy for climate change mitigation and climate change adaptation. In December 2018, the TEG published an early feedback report which contained a first set of climate change mitigation activities and their technical screening criteria, together with a call for feedback on the proposed criteria. The call for feedback closed on 9 January 2019.
The TEG also engaged with over 200 additional experts in the first half of 2019 to develop technical screening criteria for the second round of climate change mitigation and adaptation activities.
EU Green Bond Standard
The TEG has been working on recommendations for the development of an EU Green Bond Standard, with a view to increasing transparency and comparability of the green bond market, as well as to provide clarity to issuers on the steps to follow for an issuance, in order to scale up sustainable finance.
EU climate Benchmarks and disclosures for benchmarks
The TEG has been working on recommendations for the European Commission on the definition of minimum standards for the methodology of the ‘EU Climate Transition’ and ‘EU Paris-aligned’ benchmarks, that are aligned with the objectives of the Paris Agreement and addressing the risk of greenwashing. It has also worked on disclosure requirements in relation to Environmental, Social and Governance (ESG) factors in the benchmark statement and the benchmark methodology for all types of benchmarks (except interest rate and foreign exchange benchmarks) including the standard format to be used to report such elements.
The TEG engaged extensively with experts in the field, organising several roundtables and workshops in order to obtain the best possible expertise and input.
The TEG work on climate-related disclosures had a slightly different timeline than the other three tasks.