Commission publishes three new important reports on climate finance

The European Commission has published new guidelines on corporate climate-related information reporting on 18 June 2019, as part of its Sustainable Finance Action Plan. Their guidelines will provide companies with practical recommendations on how to better report the impact that their activities are having on the climate as well as the impact of climate change on their business.

The Commission has also welcomed the publication of three new important reports by the Technical Expert Group on sustainable finance, including key recommendations on the types of economic activities that can make a real contribution to climate change mitigation or adaptation (taxonomy).

• The first is a classification system – or taxonomy – for environmentally-sustainable economic activities. This aims to provide practical guidance for policy makers, industry and investors on how best to support and invest in economic activities that contribute to achieving a climate neutral economy. The group has extensively screened activities across a wide range of sectors, including energy, transport, agriculture, manufacturing, ICT and real-estate. It has identified low-carbon activities like zero-emissions transport but also transition activities like manufacturing of iron and steel in order to compile the most comprehensive classification system for sustainable activities to date. This expert report is published as the Commission's proposal on taxonomy awaits agreement by the co-legislators.
• The second expert report on an EU Green Bond Standard recommends clear and comparable criteria for issuing green bonds. In particular, by linking it to taxonomy, it will determine which climate and environmentally-friendly activities should be eligible for funding via an EU green bond. The Commission expects this to boost the green bond market allowing investors to scale up sustainable and green investment
• Finally, a third expert report on EU climate benchmarks and benchmarks' ESG disclosures sets out the methodology and minimum technical requirements for indices that will enable investors toorient the choice of investors who wish to adopt a climate-conscious investment strategy, and address the risk of greenwashing. The report also sets out disclosure requirements by benchmark providers in relation to environmental, social and governance (ESG) factors and their alignment with the Paris agreement. This expert report relates to the Commission's proposal on low-carbon benchmarks, which has recently been agreed by the co-legislators.