Regulation on the establishment of a framework for the facilitation of sustainable investments 2020/852

Regulation of the European Parliament and of the Council (EU) on taxonomy 2020/852 of 18 June 2020 on the creation of a framework to facilitate sustainable investments and on the amendment of Regulation (EU) 2019/2088 (Text with EEA relevance).

This regulation enters into force on the twentieth day after its publication in the Official Journal of the European Union. Articles 4, 5, 6 and 7 and Article 8 para. 1, 2, and 3 shall apply: a) from January 1, 2022, as regards the environmental objectives referred to in Article 9 letter a) and b); and b) from January 1, 2023, with regard to the environmental objectives referred to in Article 9 letter c) to f). Article 4 shall not apply to incentive schemes based on certificates that already exist before the entry into force of this Regulation and which set requirements for financial products that aim to finance sustainable projects.

Publication date

22. 6. 2020

This regulation sets out the criteria for determining, whether the economic activity is considered environmentally sustainable. The goal is to establish degree of environmental sustainability of the investment. The regulation aims to redirect capital flows to sustainable investments in order to achieve sustainable and inclusive growth.

Main points of the regulation:

• The Regulation applies to measures taken by Member States or the EU that set requirements for financial market participants, issuers of financial products and corporate bonds that present themselves as environmentally sustainable.
• It defines the term "environmentally sustainable investment" as an investment in economic activities that can be characterized as environmentally sustainable according to this regulation.
• It establishes six environmental goals:
  • Climate change mitigation
  • Adaptation to climate change
  • Sustainable use and protection of water and marine resources
  • Transition to circular economy
  • Pollution prevention and control
  • Protection and restoration of biodiversity and ecosystems
• It describes in detail what it means "contribute significantly" to achieve each of these goals.
• It also defines what is considered to be "significant disturbance" fulfillment of these goals.
• Misleading "minimum guarantees", which businesses must comply with in order for their activities to be considered environmentally sustainable. These guarantees relate to human and labor rights.
• Establishes requirements for "technical review criteria", which are used to assess whether an economic activity meets the conditions to be labeled as environmentally sustainable.
• Misleading A platform for sustainable financing, which will advise the Commission on technical review criteria and other aspects of the regulation.
• It determines the obligations of the Member States in terms of monitoring compliance with the Regulation by financial market participants.
• It stipulates that Member States must introduce measures and sanctions for violating the regulation.
• Amends Regulation (EU) 2019/2088 on the disclosure of information on sustainability in the financial services sector to comply with this Regulation.

The Regulation enters into force 20 days after its publication in the Official Journal of the European Union. The application of individual articles begins in 2022 and 2023, depending on the specific environmental objective.

Regulation (EU) 2020/852 represents a significant step towards achieving the goal climate-neutral EU by 2050. Its aim is to support sustainable financing and ensure that investments go to activities that have a positive impact on the environment.