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 sub group meetings for each work stream. The work of the TEG has been officially extended until year-end 2019.
The members of the TEG and the Commission recognise the importance of transparency and stakeholder outreach throughout this process. You can find the outreach plans for each subgroup here. They will be updated on a regular basis.
For more information about the TEG’s work and the legislative proposals that guide it, see also the frequently asked questions.
In terms of the first task, developing an EU taxonomy, the group invited feedback on the first proposed activities that contribute substantially to climate change mitigation and on the usability of this first list of activities. The group has also identified areas where additional technical expertise is needed. The Commission therefore hosted several workshops with the purpose of gathering this expertise.
The TEG has been working on developing the EU taxonomy for climate change mitigation and climate change adaptation. In December, the TEG published a first round of proposed activities that contribute significantly to 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 has also engaged with over 150 additional experts in the past months to develop technical screening criteria for the second round of climate change mitigation and adaptation activities.
On 18 June 2019, the TEG published a report on EU Taxonomy, which takes on board the feedback received on the first round of proposed activities and the input from the additional experts. The report is accompanied by a short user guide, which provides a quick overview of what the taxonomy is, what it is not, and how to use it in practice, and by a summary of the technical report
The TEG opened a call for feedback on its report on EU taxonomy. The call for feedback will be open until 13 September 2019 COB. In the autumn, the TEG will analyse the responses and advise the Commission on how to take the feedback forward.
Subject to the outcome of the negotiations between the Council of the EU and the European Parliament on the legislative proposal on taxonomy, the Commission has committed to consult the public on any measures it will propose under this framework.
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.
On 18 June 2019, the TEG published a report on EU Green Bond Standard, to reflect both the feedback received from stakeholders and the latest analyses conducted by the Group. A summary of the report is also available. No additional call for feedback is foreseen for the June report.
After June, the TEG will further work on its proposal for the accreditation of external verifiers, as well as monitor the latest developments in parallel on-going initiatives, both at EU level (taxonomy, EU ecolabel) and internationally (ISO work), so as to advise on consistency with the proposed EU Green Bond Standard.
The TEG has been working on defining minimum standards for the methodologies of the “EU Climate Transition” and “EU Paris-aligned” benchmarks, addressing the risk of greenwashing. It has also worked on disclosure requirements in relation to Environmental, Social and Governance (ESG) factors and the alignment with the Paris agreement, including the standard format to be used to report such elements.
The TEG has engaged extensively with experts in the field in the past few months organising several workshops in order to obtain expertise and input.
On 18 June 2019, the TEG published an interim report on Climate benchmarks and benchmarks’ ESG disclosures. A summary of the report is also available. In parallel, a 6 weeks call for feedback was launched. Taking into account the feedback received the TEG is expected to publish the final version of the report by the end of September.
Following the publication of the final report, the Commission will develop a delegated act building on the TEG work. The Commission will conduct a formal consultation on this delegated act.
The TEG work on climate-related disclosures had a slightly different time line than the other three tasks. The TEG published its final report on climate-related disclosures in January 2019.
Based on the TEG’s proposals, the Commission has developed new climate reporting guidelines. A summary of the guidelines is also available. The new guidelines will supplement the existing non-binding guidelines on non-financial reporting published by the Commission in 2017. They will be consistent with the requirements of the Non-Financial Reporting Directive, and they will also integrate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). They will provide guidance for companies on how to report on the impacts of their business on the climate and on the impacts of climate change on their business.