In order to inform its work on the action plan: financing sustainable growth published in March 2018, the European Commission established a Technical Expert Group (TEG) on sustainable finance in July 2018.
Action 1 of the action plan calls for the establishment of an EU classification system for sustainable activities, i.e. an EU taxonomy. The European Commission followed through on this action in May 2018 with a proposal for a regulation on the establishment of a framework to facilitate sustainable investment (taxonomy regulation).
Within the framework of the proposed taxonomy regulation, the TEG has been asked to develop recommendations for technical screening criteria for economic activities that can make a substantial contribution to climate change mitigation or adaptation, while avoiding significant harm to the four other environmental objectives.
Technical report on EU taxonomy
On 18 June 2019, the TEG published its Technical report on EU taxonomy. The report sets out the basis for a future EU taxonomy in legislation. The report contains
- technical screening criteria for 67 activities across 8 sectors that can make a substantial contribution to climate change mitigation;
- a methodology and worked examples for evaluating substantial contribution to climate change adaptation;
- guidance and case studies for investors preparing to use the taxonomy.
This report builds on the work that the TEG published in December last year, together with a call for feedback on the proposed criteria for these “first round” activities. 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 activities and climate change adaptation activities.
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.
Call for feedback
The TEG report on EU taxonomy is accompanied by a call for feedback running until open until 13 September 2019 COB. Stakeholders are invited to provide feedback on the proposed climate change mitigation activities, climate change adaptation principles and criteria, usability of the proposed taxonomy and future development of the taxonomy.
The TEG mandate has been extended until the end of this year. The TEG will use this time to
- assess additional feedback on criteria that have not yet been subject to public consultation;
- refine and further develop some incomplete aspects of the proposed technical screening criteria for substantial contributions and avoidance of significant harm;
- develop further guidance on implementation and use of the taxonomy.
At the end of its mandate, the TEG will make further recommendations to the European Commission on the need to adjust and complement their work on an EU taxonomy.
The TEG’s recommendations are designed to support the European Commission in the development of future delegated acts, as proposed in the taxonomy regulation.