By regulating the US$30 trillion (S$41 trillion) treasure trove green finance, the EU seeks to boost its performance on climate change, as if the regulations eventually be agreed, they will be applied only in Europe. Since several regulations made in the bloc had global ramifications before, because corporations seeking access to the region's €16 trillion (S$24 trillion) economy often find it easier to adopt its rules than to adjust to multiple regimes.
Occasioned by several misleading practices known as 'greenwashing', which call products sustainable and environmental friendly even if they don’t really are, the EU plans to establish a catalogue, known as taxonomy, in order to defense this issue.
The EU does believe it is a global leader here and that it's going to help set a standard
... said Citigroup's co-head of European government affairs Ilan Jacobs.
The taxonomy will involve sustainable practices that qualify green bonds, funds and other products. With the federation's new proposal under consideration and its goals to establish mutual definitions for green investments, the taxonomy is estimated to become the basis for new rules by the of 2022.
If everything goes smoothly, investment funds that want to claim they contribute to environmental goals ,would have to disclose to what extent they are compliant with the European standards.
Investors will need data and so, investee companies can expect to be asked to explain whether or not they meet the taxonomy criteria, even if company operations are based outside Europe.
...said Mr Nathan Fabian, a member of the technical expert group.
According to the Global Sustainable Investment Alliance, more than US$30 trillion of funds were in sustainable or green investments at the beginning of the last year. Through the 'green' investment push, the EU further plans to funnel more private funds into such products to stem the costs of the Paris Agreement.