Regulation as a driver in the financial world – change is constant

[suchona.kani.z]

In recent years, regulation has been a key driver of profound changes and adjustments in the financial industry. It will retain this characteristic in the context of sustainable finance, and for a clear reason: the structural change towards a sustainable economy requires, among other things, high levels of investment and appropriate access to the capital market in order to provide the necessary infrastructure and financial resources for the transition to the sustainable age. According to the EU Council, these are estimated at around 180 billion euros per year. A gigantic sum that must first find its way into the free economy via the capital market requires appropriate control mechanisms. With the help of regulation, the European legislative initiatives are making the financial industry responsible for the transition to the sustainable age. After all, who, if not financial intermediaries, would be better suited to ensure the economy's money supply, adequately assess sustainability risks and drive the flow of capital?

Of course, the regulation cannot require banks to invest in sustainability projects or even facilitate sustainable investments. This is by no means the aim of the EU taxonomy. However, it can support the control, management ireland consumer email list and transparency of ecological, climate-friendly and social financial transactions and thus promote the structural transition. In addition, it can provide a reliable, uniform framework and help to provide orientation and security. Banks can also use a uniform classification system to ensure the transparent representation of sustainability risks, which also imply general economic and systemic risks.

The EU Taxonomy – the rules
The Taxonomy Regulation (EU Taxonomy) as a regulatory classification system defines the technical assessment levels of sustainable economic activities in order to ensure the control and management of capital flows. It includes six clearly defined environmental objectives that use technical assessment criteria to ensure the transparent representation and implementation of the regulatory regulation in the following areas:

1. Climate protection
2. Adaptation to climate change
3. Sustainable use and protection of water and marine resources
4. Transition to a circular economy
5. Prevention and reduction of environmental pollution
6. Protection and restoration of biodiversity and ecosystems
The catalogue of criteria serves to clearly define the economic activities that are considered sustainable. The regulation combines the rules for greater uniformity with increasing transparency and reporting requirements and provides targeted measures for implementation. It defines which economic activities are considered sustainable and which are not, and prevents the risk of so-called "greenwashing " through specifications and guidelines. This increases transparency for investors and visibility for sustainable investments. The regulation came into force in July 2020. The first requirements of the EU taxonomy have been in force since January 1, 2022 and are to be gradually implemented through further mandatory measures.