On 16 September 2021, E3G and Chatham House co-hosted a joint EU-UK dialogue on the role that taxonomies can play in the net zero transition, as well as the move towards a circular economy.
Finance is an essential enabler for the transition to a net zero circular economy. Despite growing recognition of the important role of finance, the stark reality is that investment in sustainable economic activities remains far below the necessary level to deliver a transition within a suitable timeframe. Therefore, it is increasingly recognized that more needs to be done to redirect the flow of capital.
Green financial taxonomies offer a promising tool with which to do this. For example, a green finance taxonomy provides a common classification system for identifying activities, assets and project categories that deliver on key climate, green, social or sustainable objectives with reference to identified thresholds or targets.
In light of the current consultation on circular economy criteria in the EU taxonomy, the development of a UK Taxonomy and G20 discussions on a global common grounds taxonomy framework, E3G and Chatham House co-hosted a joint EU-UK dialogue on the role that taxonomies can play in the net zero transition, as well as the move towards a circular economy.
More than 250 attendees, including many stakeholders involved in drafting technical guidance and policy for the respective taxonomies, enjoyed contributions by:
- Kate Levick, Associate Director – Sustainable Finance, E3G
- Nathan Fabian, Chief Responsible Investment Officer, Principles for Responsible Investment
- Benjamin Fagan-Watson, Head of Green Finance Team, UK Department for Business, Energy and Industrial Strategy
- Sean Kidney, CEO, Climate Bond Initiative
- Massimiano Tellini, Global Head – Circular Economy at Intesa Sanpaolo
After opening remarks from Kate Levick, Nathan Fabian gave an introduction to the EU taxonomy, highlighting the next steps of the EU’s Platform of Sustainable Finance that include the recognition of transition activities and the plans for a social taxonomy.
Benjamin Fagan-Watson laid out the UK Government’s green finance regulation roadmap pointing out, that the EU taxonomy serves as a basis for the British version.
Sean Kidney stressed the need for a global harmonization of taxonomies following a science-based approach, as countries’ NDCs have been largely insufficient in terms of aligning climate action with science-based targets. A common ground taxonomy, as jointly developed by the EU and China, has the chance to become the fundamental platform for collaboration and coordination across economies.
Finally, Massimiano Tellini highlighted the significant appetite from investors to invest in the circular economy transition, thereby making the case for a taxonomy that provides a clear framework for transition investment activities.
For more information, please watch the embedded video.
The event was funded by the Laudes Foundation.