Sustainable Finance

As part of the Paris Climate Agreement, the international community has committed itself to limiting global warming to well below 2 ° C by the year 2100 and, if possible, to no more than 1.5 ° C compared to 1850. The European Union sees itself as one of the global engines and pioneers of climate protection and has obliged its member states to bring about corresponding reductions in the emissions of climate-damaging greenhouse gases (GHG). In order to achieve the so-called two-degree target, the EU plans to reduce GHG emissions by at least 40% by 2030, as well as a long-term reduction in emissions of 80-95% (compared to 1990 levels).

It is estimated that this will require annual investments of between 175 and 290 billion euros. According to the European Commission, private investors will have a crucial role to play in filling this investment gap. Many measures to avoid emissions also lead to considerable co-benefits, for example with regard to achieving the Agenda 2030 Sustainable Development Goals, or with regard to environmental social governance issues. Parallel to this political development, it can be said that sustainability aspects have gained in importance as factors for economic (investment) decisions by private investors. In line with and as a consequence of the increased demand, the range of financial services that attract customers under the heading of sustainability is growing. These include, among others, green bonds, green mortgages and (national) funding programs.

Important for rapid growth of the market for sustainable investments, and thus also a sustainable real economy, are criteria and standards that allow investors to assess the actual sustainability of the advertised products and are used by the real economy as a basis for reporting to the financial sector. These play a crucial role in the efficient conversion to a CO2-free and sustainable economy. As the facilitation of the market transformation is engrained in the DNA of the Climate Positive Europe Alliance and informs our very being, we believe sustainable finance to be one of the key levers to deliver a quick and reliable transition of the European market.

The EU Taxonomy

The EU is examining how to support this integration, and released a “Sustainable Finance Action Plan“ to mobilise finance for sustainable growth, Finance is a critical enabler of transformative improvements in existing industries, within Europe and globally. One aspect of the 2018 Action Plan was to establish a clear and detailed EU classification system (the so-called “Taxonomy”) for sustainable activities. In March 2020, the Technical Expert Group, TEG, proposed Taxonomy screening criteria for four associated economic activities: construction of new buildings, building renovations, individual measures and professional services, acquisition and ownership.

In July 2020, Green Building Council España (GBCe), the German Sustainable Building Council (DGNB), the Danish Green Building Council (DK-GBC), and the Austrian Green Building Council (ÖGNI) initiated a study for the “Evaluation of the market-readiness of the proposed „EU Taxonomy Screening Criteria“ for construction and real estate activities”.
The study aims to guide the transition of the Taxonomy screening criteria from a technical proposal into a functioning system at the very core of a future-proof European economy. By practical application of the Taxonomy criteria to real buildings or projects, the study tests the strength of the planned criteria in delivering the envisaged impacts of the Taxonomy and identifies costs and benefits of the implementation of related processes for both the European Commission and to the financial market participants alike. The study participants moreover gained invaluable insights regarding data quality and verification in regards to the greening of their respective portfolios. These insights form the basis of capacity building within the participating organisations and foster the implementation of sustainability criteria into their processes.