Sustainable finance

Investing in a sustainable future

June 2023 | #SustainableFinanceEU

The EU sustainable finance agenda aims to support companies and the financial sector in the
transition to a climate-neutral and sustainable economy, by encouraging private funding of
sustainable projects and technologies.

This package is a major step towards completing the EU sustainable finance

framework, while ensuring that its elements are easier to use with minimum costs and
help finance the transition.

The priority is helping market participants implement the EU Taxonomy and the overall
framework, and to enhance its usability.

INVESTING IN THE TRANSITION

Sustainable finance is about financing both what is already environment-friendly today (green finance) and the
transition to environment-friendly performance levels over time (transition finance).

Short term Medium term Long term

Finance Finance Finance

Transition Transition
Finance Finance

Green
Finance
Green Green
Finance Finance

General finance without sustainability objectives

Finance to transition to EU objectives and become green in the future
Financing of investments that are green
TOOLS FOR FINANCING THE TRANSITION
Example of a company in transition
Sustainability performance

Voluntary tools that companies can

Invests in new use to finance their transition towards
green activities
sustainability over time include:

Upgrades ƒ EU Taxonomy
production technology
ƒ EU climate benchmarks
Increases
energy efficiency ƒ European Green Bond standard
ƒ Science-based targets
ƒ Transition plans
2023 2028 2033

Share of green activities of a company

TODAY’S PACKAGE: EU TAXONOMY DELEGATED ACTS

Climate Change Climate Change

Mitigation Adaptation

Amendments to existing
Climate Delegated Act

Circular Water and Marine

New: Environmental Economy Resources
Delegated Act
(including amendments to
the Disclosures Delegated Act)

Pollution Prevention Biodiversity

and Control and Ecosystems
 EU TAXONOMY ECONOMIC SECTORS AND ACTIVITIES COVERED

Disaster risk management Buildings

NEW

NEW
Nature-based solutions. Construction and renovations,
Emergency Services, Flood demolition and wrecking,
risk prevention and protection maintenance of roads and
infrastructure. motorways, use of concrete in
civil engineering.
Construction, energy efficiency
Water supply and sewerage measures and renovations.
NEW

Water supply, urban waste water,

sustainable drainage systems
(SUDS), phosphorus recovery from
waste water.
Manufacturing

NEW
Plastic packaging goods,
Water supply, sewerage, waste electrical and electronic
management and remediation.
Climate equipment, pharmaceuticals.
Delegated Act Enabling technologies, heavy
Transport and
industry (transitional).
NEW

New transitional water and air

transport, automotive and Environmental
rail components. Delegated Act Energy
Low emissions, transitional Renewables, transmission,
alternatives until 2025, specific nuclear and natural gas
infrastructures. activities (subject to stringent
conditions).

Services
NEW

Sale of spare parts and ICT and professional activities

second-hand goods.

NEW
Software and consultancy
Preparation for re-use of IT/OT (information/operational
end-of-life products and product technologies) data driven
components, marketplace for the Forestry solutions.
trade of second-hand Afforestation, conservation, forest
Research, data solutions and
goods for reuse. management, rehabilitation and
centres.
restoration of forests.

PROPOSAL FOR A REGULATION ON ESG RATINGS

We are taking further steps to make it easier to invest in a more sustainable

economy by bringing more transparency to the Environmental, Social and
Governance (ESG) ratings market and introducing rules on ESG rating
agencies’ operations.

ESG ratings assess the environmental, social, and governance

characteristics, exposures to ESG risks or the impact on the
environment and society in general of an entity, a financial
instrument or a financial product.
 HOW ESG RATINGS WORK

Company data disclosures

(mandatory: e.g. CSRD, Taxonomy and voluntary) DATA ESG RATINGS
PROVIDERS

Company responses ESG Ratings

to information requests

Alternative company data sources

(e.g. satellite images, public databases) DATA
INVESTORS
ASSET MANAGERS
BENCHMARK ADMINISTRATORS

WHAT IS CHANGING WITH TODAY’S ESG RATINGS PROPOSAL?

BEFORE AFTER

Lack of clarity on ESG ratings

Lack of clarity about
methodologies and More transparency More integrity
ESG rating providers’ operations
data sources

Clearer objectives and Requirement to be authorised

methodologies and ongoing supervision
Companies are unsure if ESG
Investors do not trust quality of
ratings reflect their actual
ESG ratings Better clarity on data sources
performance

Investors and rated companies cannot take informed decisions Investors and rated companies can take informed decisions

Single Market potential to contribute to European Green Deal and UN Better functioning Single Market
Sustainable Development goals is not fully exploited contributing to the EU’s green deal and
the UN Sustainable Development Goals

© European Union, 2023

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