Why the EU needs a common definition for sustainable investments
Sustainable development requires the preservation of natural resources and respect for human and social rights. Climate action is an important aspect, as the need to limit and mitigate the effects of climate change becomes more and more urgent.
The EU is committed to gradually decreasing its greenhouse gas emissions. The European Green Deal, the EU’s flagship initiative on climate action, sets a goal of zero net emissions by 2050.
To achieve the goal, the EU must invest in new technologies.
Public investment will not suffice and private investors will have to step in to finance climate-friendly projects. This requires clear criteria on what exactly is sustainable and eco-friendly; otherwise, some funding might be directed to “greenwashing” projects that claim to be green, but in reality are not.
Some EU countries have already started developing classification systems. Both companies seeking funding and investors interested in supporting sustainable projects would benefit from common EU standards.