The EU Taxonomy as a Tool to Identify the Opportunities of the Green Industrial Revolution

ESG regulation

The EU Green Deal is a transformational project, not only for our environment but also for our economy. The race to Net Zero offers a once-in-a-generation opportunity for Europe to become a leader in the Green Industrial Revolution that is underway globally and to cement its global leadership in sustainable finance.

If policy is built to reward Europe’s companies through the transition phase via access to cheaper capital, this will help fund more innovation, create new products and services and provide more jobs, all which will help the EU achieve greater EU prosperity and achieve its climate goals, a dual model of success for the rest of the world to follow. The EU Sustainable Taxonomy has the opportunity to become the roadmap to achieve this goal, by defining Net Zero investments and to mainstream the climate transition.

However, as currently designed, the EU Sustainable Taxonomy will fall short. For it to become the cornerstone of the EU’s approach to Net Zero and sustainable finance, it needs to be supported by broader policy and to better incorporate the need for companies to transition. The journey to Net Zero is as important as the end destination.

The Taxonomy is also too European centric to be able to become a global standard, which will limit its usefulness and create multiple competing frameworks. And lastly its complexity will likely add, rather than reduce the burden on European companies and investors that wish to invest sustainably. There should be some organic carrots to balance out the sticks in the approach.

Therefore, to fulfil the EU’s ambition for the EU Sustainable Taxonomy, we believe the policy framework in Europe needs to evolve to address four priorities and we make 4 recommendations to achieve this:

  • Scaling-up green financing
    Closing the financing gap for Taxonomy-aligned investments
  • Focus on transition
    Building out the Taxonomy as an economy-wide tool for transition
  • Make it a global standard
    Transforming the Taxonomy into a global standard to attract global capital
  • Reduce the cost and burden of building the green economy
    Operationalising the Taxonomy to reduce the costs of financing the green economy
Read the full paper to learn more.
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Important information

  • Data as of 31 May 2021 unless stated otherwise.


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