Issue link: https://maltatoday.uberflip.com/i/1198602
09.01.2020 10 INTERVIEW The EU's new green taxonomy European Parliament negotiators reached an agreement with Council in December on new criteria to determine whether an economic activity is environmentally sustainable. The so-called "taxonomy regulation" stipulates that the following environmental objectives should be considered when evaluating how sustainable an economic activity is: • climate change mitigation and adaptation; • sustainable use and protection of water and marine resources; • transition to a circular economy, including waste prevention and increasing the uptake of secondary raw materials; • pollution prevention and control; and • protection and restoration of biodiversity and ecosystems Nathan Fabian, the chief responsible investment officer at Principles for Responsible Investment (PRI) and a member of the European Commission's technical expert group on sustainable finance, answers questions about the proposed taxonomy Why is Europe proposing the taxonomy? Why do we need precise definitions of what counts as "green" and what doesn't? The big idea is to create a common language on what counts as green. For green investment markets to grow large, and fast, there needs to be clar- ity, transparency and, importantly, trust on when an economic activity really is contributing to a better en- vironment. If there is no agreement on what is green, it is hard for investors to know if they are getting what they expect when they seek an environmentally sustainable investment. Clear definitions will also help in- vestors understand their exposure to environmental trends, which can play back into the investment risk and op- portunity. Why is it so significant? What will be the impact on industry, investors? If investment funds want to claim they contribute to environmental ob- jectives, they would have to say how. This disclosure requirement would apply for any investment fund prod- uct issued in Europe, including by financial firms domiciled outside Eu- rope. Investors will need data and so in- vestee companies can expect to be asked to explain whether or not they meet the taxonomy criteria, even if company operations are based out- side Europe.