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The EU Sustainable Finance Taxonomy and Its Contribution to Climate Neutrality

Aufsätze referiert extern - Web of Science

Franziska Schütze, Jan Stede

In: Journal of Sustainable Finance & Investment (2021), im Ersch. [online first: 2021-12-08]

Abstract

The EU Taxonomy is the first standardised and comprehensive classification system for sustainable economic activities. It covers activities responsible for up to 80% of EU greenhouse gas emissions and may play an important role in channelling investments into low-carbon technologies by helping investors to make informed decisions. However, especially in transition sectors much depends on the stringency of the technical performance thresholds that the Taxonomy applies to economic activities that are not yet ‘green’. This paper shows that for several sectors, the thresholds are not yet on track to support the transition towards climate neutrality. To this end, we analyse a large-scale public consultation with detailed responses to the specific thresholds from a variety of stakeholders. Especially for emission-intensive sectors, two distinct use cases of the Taxonomy can be distinguished: For new investments, criteria should be stricter than for current activities of companies. We also argue that for the sectors not covered by the Taxonomy, there is a need to differentiate between low-emissions activities and high-emission activities, which are incompatible with a low-carbon future.

Franziska Schütze

Research Associate in the Climate Policy Department



JEL-Classification: G00;G14;G18;Q01;Q54;Q56
Keywords: EU Taxonomy, sustainable finance, classification system, Green investments
DOI:
https://doi.org/10.1080/20430795.2021.2006129

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