Sven Giegold

Strong signal for sustainable finance: EU Commission expert group excludes coal and nuclear power from green financial products

Today, the EU Commission’s Technical Expert Group published recommendations on sustainable finance. Last spring, the EU Commission had presented various legislative proposals as part of its action plan for sustainable finance. The expert group’s recommendations relate to the classification of sustainable investments (taxonomy), a methodology for sustainable benchmark indices, measures for climate-related disclosure obligations and the design of an EU standard for green bonds.

Regarding classification, the experts recommend excluding investments in coal and nuclear power from sustainable investments. This also applies to investments meant to increase efficiency of existing fossil infrastructure. In contrast, investments that make a positive contribution to climate protection and do not undermine other environmental goals such as the protection of ecosystems should be considered sustainable. The European Parliament has already established its position for a framework law for classification, while negotiations in the Council of Ministers are still ongoing.

The technical expert group recommends green bond issuers following the EU standard to choose whether to publish the projects financed with the bond individually or simply provide an overview of the portfolio. The current industry standard (Green Bond Principles) recommends that issuers publish projects, while the Indian Green Bond Standard already requires publication.

Sven Giegold, spokesperson for Bündnis 90/Die Grünen in the European Parliament, comments:

“The exclusion of coal and nuclear power from green investments is a success for stable and sustainable financial markets. The Commission should follow the advice of the expert group and courageously set standards for sustainable investments worthy of the name. Only with binding rules can the EU become a pioneer in sustainable finance.

The proposal for an EU standard for green bonds does not bring any added value. The experts’ recommendations are disappointing. Green bonds whose financed projects remain opaque open the door to greenwashing. The experts’ proposal hardly goes beyond the non-binding industry standard and is therefore superfluous. The EU Commission must now put better proposals on the table. It’s only with transparency that Europe can gain the trust of environmentally conscious investors and set a global standard. An un-detailed overview publication would only be justified for very small projects such as the energy-efficient refurbishment of residential buildings.

In order for financial markets to price in rising climate and environmental risks and thus avoid abrupt losses in value for investors, transparent and binding rules and standards are needed. Binding rules for sustainable investments guide investments in the ecological modernisation of our economy. The EU is thus also making progress in climate protection.”

Link to the report of the Technical Expert Group on the EU classification of sustainable investments:

Link to the report of the Technical Expert Group on the EU Standard for Sustainable Bonds:

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