Green Finance

Green Finance

What is Green Finance

Following the outcomes of the Paris Agreement for Climate Change (2015) and the Sustainable Development Agenda 2030, the European Commission nominated the TEG (Technical Expert Group on sustainable finance), a commission focused on the designation of technical criteria to determine which activities could positively affect the existing environmental conditions and/or adapt to the upcoming climate-change scenarios. In June 2019 the TEG published the “EU Sustainable Finance Action Plan”. This document introduced some innovative ideas within the finance sector, such as, the concept of taxonomy, a pattern-regulation under which all financial activities developed within the EU will have to be classified based on sustainability criteria. This classification system addresses five major environmental issues and affects both private and public entities. On one side the European Union and all its Members, on the other side all subjects involved within the finance and investment market.

 Taxonomy merged, along with other innovative concepts, with the “Green Deal” released in December 2019 by the European Parliament, an investment plan focused on sustainable development aiming to mobilize 1 trillion Euros by 2030 within the EU Community.

According to the EU, by year 2050 all companies and businesses within the EU will have to evaluate and classify their assets following specific sustainability- based criteria. However, some countries such as Germany aim to fully implement this new system by 2030.

The whole EU is moving toward a more sustainable development and the fi nance sector plays a key-role for the whole transition.