With construction being at the heart of a transition to a more sustainable European Union, the construction sector is also an essential element of the upcoming EU Taxonomy developed in the context of sustainable finance. The EU Taxonomy determines, amongst others, under which conditions key construction activities will be considered as sustainable in order to be eligible for sustainable investment. Hence, the Taxonomy will be a decisive factor when it comes to the access to private and public investment. As member of the Platform on Sustainable Finance, FIEC will play a key role in developing the Taxonomy.
The Taxonomy has its origin in the Action Plan on Sustainable Financing that was set up in March 2018 by the European Commission in order to honour the EU’s commitments within the Paris Agreement from 2015. The Action Plan comprises amongst other things a Regulation on the establishment of a framework to facilitate sustainable investment also referred to as Taxonomy. The latter is destined to address the investment gap as regards the achievement of the EU’s sustainability goals. Different national approaches as to what can be labelled as environmentally sustainable as well as greenwashing impede cross-border investment flows. Hence, a common language/methodology about what can be considered as environmentally sustainable will be developed. The objective consists of creating uniform criteria to assess the degree of sustainability of economic activities. This will apply to the labelling of financial products and the disclosure of non-financial information by large companies.
Several construction activities having the potential to mitigate climate change will be covered: construction of transport infrastructure; construction of water projects; construction of new buildings; renovation of existing buildings; individual renovation measures, installation of renewables on-site and professional, scientific and technical activities, acquisition of buildings. Hence, the Taxonomy might have a considerable impact on the financing of companies themselves and of individual construction projects. In addition, the Taxonomy might be applied in future EU legislation such as for the allocation of EU funds or in the public sector.
The Taxonomy will mainly be developed by the Platform on Sustainable Finance. From 503 applicants, FIEC was appointed as a Member of the Platform and will be amongst the 50 experts to advise the European Commission on the development of the technical screening criteria for the EU Taxonomy.