Green Taxonomy (Regulation)
With a regulation, the EU Commission wants to create the framework for sustainable investments. In order to attain this, the criteria that economic activities must comply with to qualify as “environmentally sustainable” are now set out.
In cep’s view, an EU green taxonomy may help meet the increasing demand by institutional as well as retail investors for “sustainable” financial products.
However, the use of the EU taxonomy should be optional, not mandatory. Any direct reference in financial market regulation for banks, insurance or investment firms to the green taxonomy should take place with caution, as sustainable investments may carry a high risk. First and foremost, financial market regulation should ensure financial stability.