The Member States' ambassadors to the European Union (Coreper) approved, on Wednesday 18 December, the final agreement reached between the co-legislators, Monday evening, on the regulation laying the foundations for the future taxonomy on sustainable finance (see EUROPE 12392/14).
According to our information, 25 countries voted for the agreement and three countries abstained: Austria, Hungary and Poland. Coreper's green light puts an end to the saga, following the rejection of a first compromise text last week by the Member States (see EUROPE 12388/16).
It will also have to be approved in January by the European Parliament's Committee on Economic and Monetary Affairs (ECON) and the Environment Committee (ENVI) and then confirmed by a vote in plenary session.
Taxonomy: instructions
In practice, what does the agreement contain? It lays the foundations for a common classification that should allow investors to clearly know which activities are considered environmentally sustainable. It does not constitute a 'green' list of economic activities, but sets out how this list will be defined and incorporated into EU law.
Thus, the agreement provides that, to be qualified as "environmentally sustainable", an activity must make a significant contribution to at least one of the following six objectives: - climate change mitigation; - adaptation to climate change; - the sustainable use and protection of water and marine resources; - the transition to a circular economy; - pollution prevention and control; - the protection and restoration of biodiversity and ecosystems. At the same time, it should "do no significant harm" to any other environmental objectives.
These activities can be classified into three different categories, namely: - "Green" activities, which in themselves contribute substantially to one of the six environmental objectives; - "Transition" activities for which there are no low-carbon alternatives but which support the transition to a climate-neutral economy; and -"Enabling" activities, which allow other activities to make a substantial contribution to one of the objectives.
The agreement explicitly excludes electricity generation activities from solid fossil fuels. For nuclear energy and gas, which were the subject of a fierce battle (see EUROPE 12381/13), the question was left to later.
The text amended by the EU Council (see EUROPE 12391/10), which was given the green light by the European Parliament on Monday, recognises the importance of "climate neutral energy" for the transition in a recital, while the principle of "assessing the feasibility of all existing technologies" was introduced in an article dealing with "transition" activities.
The analysis will be done on a "case-by-case" basis, within the framework of the technical selection criteria that will be decided by the European Commission and laid down by delegated acts, an EU official assured this on Wednesday.
To this end, the Commission will be assisted by a platform bringing together experts from different sectors, but also by a group of experts from the Member States. In addition, it will take into account the final recommendations of the Technical Expert Group on Sustainable Finance (TEG), which are expected to be ready in February 2020 (see EUROPE 12277/20).
Will Member States be able to veto the list? No, assured the same official. "Member States will be involved in the preparation of the taxonomy: they will be consulted, informed and given the opportunity to give their opinion, but they will not have the opportunity to veto the 'green' list before it is adopted by the Commission", the official explained. Nevertheless, once the delegated act is adopted by the Commission, the Parliament and the EU Council will have the possibility of opposing the texts as a whole.
Once the taxonomies are ready, financial market participants will be required to disclose information on how the investments underlying their financial products support economic activities that meet the criteria of the taxonomy. In the case of financial products for which investments are made in economic activities that are not included in the taxonomy, and therefore not environmentally sustainable, a specific declaration will then be required.
The taxonomy for climate change mitigation and adaptation should be established by the end of 2020, with a view to ensuring its full implementation by the end of 2021. For the other four objectives, the taxonomy should be established by the end of 2021 and applied by the end of 2022. See the text of the agreement: https://bit.ly/2Ev0HMv (Original version in French by Marion Fontana)