EU Technical Expert Group on Sustainable Finance presents new reports

The EU Action Plan on "Financing Sustainable Growth" of March 2018 aims to strengthen the financial sector contribution to a climate-friendly and sustainable development with ten measures. In July 2018, the EU Commission has convened a broad expert group, including KfW, to provide technical support. KfW experts have particularly contributed to the workstreams on EU Taxonomy and a possible EU Green Bond standard. Today the expert group presented its recommendations on these two topics as well as on EU climate benchmarks.

The taxonomy shall serve as a common "language on sustainability" for the financial sector. The report of the expert group recommends technical minimum requirements to define which economic activities make substantial contributions to climate protection and adaptation. These activities can thus be described as green and environmentally sustainable. This provides a basis for the financial sector to develop products that demonstrably finance green and environmentally sustainable activities. The additional financing required for a climate-friendly and sustainable development in the EU is enormous, amounting to EUR 270 billion annually in the areas of transport, energy, water and waste management alone.

The proposal for an EU Green Bond Standard recommends the creation of a voluntary standard and contains details for a standard. EU Green Bonds shall finance projects aligned with the taxonomy. Issuers have to provide a Green Bond Framework and report on the allocation of proceeds as well as impact. Framework and use-of-proceeds reporting need to be verified by an accredited verifier.