EU sets out new guidance on reporting climate-related information

The European Commission has published new guidelines on corporate climate-related information reporting, as part of its Sustainable Finance Action Plan. The guidelines are aimed at providing companies with practical recommendations on how to better report the impact that their activities are having on the climate as well as the impact of climate change on their business.

Called the EU Taxonomy, the framework has been developed by the Commission’s Technical Expert Group on Sustainable Finance, and enables companies and their investors to determine which economic activities that are widely considered 'green' can be implemented without unintended negative consequences elsewhere in the environment or society. It covers a wide range of areas including: climate mitigation; climate adaptation; water stewardship; circular economy measures; pollution prevention and control and ecosystem protection. The intention is to ensure disclosure, prevent greenwashing and encourage broader investment in the low-carbon economy.

Valdis Dombrovskis, Vice-President responsible for Financial Stability, Financial Services and Capital Markets Union, said: “The climate emergency leaves us with no choice but transit to a climate-neutral economy model. These new guidelines will help companies to disclose the impact of the climate change on their business as well as the impact of their activities on climate and therefore enable investors make more informed investment decisions. I also welcome the three reports by the Technical Expert Group, which are an important contribution to European policy-making and global debate on green finance.”

The initiative is part of what the Commission says are ongoing efforts to ensure that the financial sector can play a critical role in transitioning to a climate-neutral economy and in funding investments at the scale required. They will provide guidance to around 6,000 EU-listed companies, banks and insurance companies that have to disclose non-financial information under the Non-Financial Reporting Directive.

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