European taxonomy

Katarzyna Szwarc

Winter 2020

An EU Social Taxonomy: why do we need it and how to design it?


Public spending and investment in the EU is likely to reach unprecedented levels in the coming years, amongst all due to the Green Deal, the Just Transition Mechanism as well as the Next Generation EU Covid recovery package. In addition, this spending will for the first time in history be covered with joint European debt, a third of which will be issued in the form of green bonds. This is positive news in terms of sustainability of that spending, given that the EU Green Bond Standard is consistent with its framework of sustainable investments, namely the EU Taxonomy which will go live in 2022.

Private spending on sustainable initiatives is also expected to increase
substantially as a result of the rising popularity of ‘purpose investing’ in general. Accordingly, starting from the next year, any financial product labelled as ‘green’ or ‘sustainable’, sold or distributed in the EU, will need to comply with the Taxonomy.