(Reuters) – European Union lawmakers on Thursday approved green finance rules ensuring investments do not prop up polluting industries, requirements they and investors say should also guide spending of hundreds of billions of euros in coronavirus recovery funds.
European Union flags fly outside the European Commission headquarters in Brussels, Belgium, December 19, 2019. REUTERS/Yves Herman
The rules, known as the EU sustainable finance “taxonomy”, will restrict which investments can be classed as green and force providers of financial products to disclose which investments meet the criteria, from the end of 2021.
But the coronavirus pandemic has given the rules a new purpose – to guide spending from the Commission’s proposed 750 billion euro EU economic recovery fund, which EU leaders will discuss on Friday.
The EU’s executive, which has until the end of 2020 to approve the final green finance rules, has proposed applying them to parts of the bloc’s coronavirus recovery fund including a 15.3 billion euro “InvestEU” pot.
“The Commission continues to explore how the taxonomy can be used in the context of the European Green Deal by the public sector” a Commission spokesman told Reuters, referring to its “Green Deal” plan to reduce net EU emissions to zero by 2050.
Bas Eickhout, the EU lawmaker who led parliament’s talks on the green finance rules, said the rules should apply to the entire 750 billion euro recovery fund.
“This is taxpayers’ money. In order to make it compliant with the green deal, the taxonomy should be your guidance,” he told Reuters.
Investors also urged the Commission to weave climate conditions throughout the entire EU recovery package.
“The stimulus package cannot at the very least harm or undermine the climate and environmental goals nor contravene social standards,” said Helena Viñes Fiestas, Global Head of Stewardship and Policy at BNP Paribas Asset Management.
Spending EU money on polluting projects would “end up costing taxpayers twice the amount”, since such projects would need to be replaced with low-carbon infrastructure in the long-run, she said.
Reporting by Kate Abnett, Simon Jessop; editing by Marine Strauss, William Maclean