Just before the end of 2019, the European Parliament and the Council agreed that financial products on sale in the EU will have to reference the EU Taxonomy. Requirements relating to climate-related objectives are due to apply from December 2021, while criteria for other aspects of the green economy, such as water, waste, biodiversity protection and the circular economy, are due to apply at the end of the following year.
When marketing environmental or sustainable funds, European investment managers will have to disclose:
- How, and to what extent, they have used the Taxonomy to assess the sustainability of underlying investments;
- What environmental objectives the investments are contributing to; and
- The proportion of underlying investments that are included in the Taxonomy.
For funds that are not marketed as environmental or sustainable, European investment managers can state that they do not take the Taxonomy into account.
The aim is to enable investors and other market participants to more easily understand to what extent investment products are exposed to the green economy.