A green standard and criteria for defining sustainable investments are being introduced. The European Parliament has reached a political agreement with the EU governments on this matter.
Negotiators have agreed on a European classification system for financial products. Going forward, not only gas and coal will be excluded, but also investments and holdings in companies and services like Uber and Deliveroo will be placed on the 'blacklist'.
Investments in nuclear energy, gas, and coal will not be considered sustainable in two years’ time, according to Dutch Member of the European Parliament Bas Eickhout (GroenLinks), who negotiated on behalf of the parliament. Additionally, the new sustainability label also includes social standards when measuring the 'sustainability level'.
Financial institutions such as pension funds and asset managers may henceforth only label their products as “sustainable” if they meet certain criteria. Dutch MEP Paul Tang, who led the negotiations on behalf of the European Social Democrats, states that a sustainable investment must not promote child labor or undermine workers’ rights through questionable employment contracts.
“This label clarifies when financial products are sustainable – good for both people and the planet. This will lead to billions in green investments and thus forms the foundation of the Green New Deal. It is time for banks, asset managers, and pension funds to contribute to our society,” said Tang.
GroenLinks negotiator Eickhout is pleased that the EU “sets the global standard for sustainable investing with these definitions. Despite fierce lobbying from the business sector, ambitious criteria for sustainable investments are included in this agreement.” The World Wildlife Fund called it “a step towards a cleaner financial system in Europe” in a response.