Climate goals and climate rules

The FT reports that scientists are warning the EU that its new rules for what constitutes sustainable finance endanger its pledge to reduce emission to net zero by 2050.

Sustainable finance requires some way of distinguishing between unsustainable and sustainable investments. While there are lots of private ratings agencies, the EU wants to create its own taxonomy for “what counts as green investment.”

On the surface this is wonderful and a great step for humanity. As is often the case, the devil is in the details. There is an enormous amount of money riding on whether an investment counts as “green,” and there is a corresponding pressure being applied to how the standards are written.

These arcane rules, negotiated in anonymous conference rooms in Brussels, will dictate the flow of trillions of dollars. We need to watch closely.

I highly recommend following Daniela Gabor’s work on this topic.

2 thoughts on “Climate goals and climate rules

  1. I think the answer to “what can be considered as a green investment” could consider three factors:

    a) Investments should be made in the context of the 2030 Agenda
    b) The investments and initiatives should be aligned to sustainable mission oriented policies (see Mariana Mazzucato on this issue), not just business initiatives focus on risk management or regulation compliance.
    c) Another factor that could be used is the level of innovation in those initiatives and the potential changes they can create in the business model of each business
    d) The synergies that such a project could create in the value chain to advance in the 2030 Agenda

    These factors could create a framework to focus the green investments in high impact projects not just in risk management or regulation compliance initiatives.

    Liked by 1 person

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