A Critical Analysis of the EU Green Taxonomy: Is It Fit For Purpose?



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Rivista di Diritto del Risparmio

 

A Critical Analysis of the EU Green Taxonomy: Is It Fit For Purpose?[*]

 

di Luca MENEGHINI[**]

 

The paper discusses the most debated topic currently unfolding in the European sustainable finance space, the EU Green Taxonomy. In a nutshell, the EU Taxonomy is a “green list”, setting out uniform definitions for environmentally sustainable economic activities. The aim of the paper is twofold. On the one hand, we seek to educate the reader on the key features of the Taxonomy, shedding light on its environmental objectives, scope of application, disclosures framework (with a focus on the SFDR and the Green Asset Ratio), and the impact on both green bonds (specifically, on the EU Green Bond Standard) and investment funds, arguably the two most impacted asset classes. On the other hand, we take the approach of analyzing such features from a critical standpoint in order to shed light on regulatory gaps, expose inconsistencies and test whether the Green Taxonomy as a legal tool can succeed in facilitating the transition to a low-carbon economy. Against this backdrop, the paper argues that the EU Taxonomy is not fit to achieve its ambitious purposes.

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Rivista di Diritto del Risparmio

 Giugno – Fascicolo 2/2022

Abstract.

The paper discusses the most debated topic currently unfolding in the European sustainable finance space, the EU Green Taxonomy. In a nutshell, the EU Taxonomy is a “green list”, setting out uniform definitions for environmentally sustainable economic activities. The aim of the paper is twofold. On the one hand, we seek to educate the reader on the key features of the Taxonomy, shedding light on its environmental objectives, scope of application, disclosures framework (with a focus on the SFDR and the Green Asset Ratio), and the impact on both green bonds (specifically, on the EU Green Bond Standard) and investment funds, arguably the two most impacted asset classes. On the other hand, we take the approach of analyzing such features from a critical standpoint in order to shed light on regulatory gaps, expose inconsistencies and test whether the Green Taxonomy as a legal tool can succeed in facilitating the transition to a low-carbon economy. Against this backdrop, the paper argues that the EU Taxonomy is not fit to achieve its ambitious purposes.



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[*] Contributo approvato dai referee. The author is responsible for the information contained herein, the views expressed are those of the author in his personal capacity and do not reflect those of the author’s employer. This document should not be construed as the provision of investment advice.

[**] Senior Analyst at Goldman Sachs, J.D. (Trieste), LL.M. Finance (Frankfurt), LL.M. Candidate (Columbia Law School).

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