How the EU regulates sustainability

The European Green Deal provides a roadmap setting out how the EU intends to achieve its objective of being climate-neutral by 2050. The plan revolves around the idea of decoupling economic growth from resource consumption, the de facto consequence of which is that in future, growth will by definition have to be sustainable.

The EU's action plan aims to use regulation to create a situation in which the financial system promotes sustainable economic development. What this means in practice is directing capital flows towards sustainable investments, increasing transparency and highlighting the financial risks that arise if ESG issues are neglected.

The EU taxonomy, which is one of the elements of the action plan, makes it possible to measure the sustainability of specific economic activities. While the taxonomy's six objectives are at the moment still limited to environmental factors, additions to cover social dimensions of sustainability are already being considered. All the criteria are solely about compliance – and compliance must be achieved without causing adverse consequences elsewhere.

1. Climate change mitigation

2. Climate change adaptation

3. The sustainable use and protection of water and marine resources

4. The transition to a circular economy

5. Pollution prevention and control

6. The protection and restoration of biodiversity and ecosystems