“It must be green ! Okay ?”

The European Commission published today the final report by its so called “High-Level Expert Group on Sustainable Finance” (HLEG).

It was established on 22 December 2016 at the request of the European Commission to advice on developing a “comprehensive EU strategy on sustainable finance”. It comprised 20 senior experts from civil society, the finance sector and academia as well as a limited number of observers from European and international institutions. The task of the HLEG was to provide recommendations to the Commission on how to (i) better integrate sustainability considerations in the EU’s financial policy framework, (ii) protect the stability of the financial system from risks related to the environment, and (iii) mobilise capital, notably from private resources, to finance sustainable investments and growth.

I used the past because with this final report, HLEG mandate finished today.

I have read it carefully.

The first recommendation of the report is to “establish and maintain a common sustainability taxonomy at the EU level.

If I were a HLEG member, I would probably be proud to be able to tell my grandson – I was lucky to be a very young grandfather – that I prepared his future by helping promote the “taxonomy”, a “branch of science that encompasses the description, identification, nomenclature, and classification of organisms” according to Wikipedia.

Indeed, the common run of people like you and me will initially consider this as a Brussels technocrat story ! But actually, behind this EU jargon, it’s the first question to answer : what means “sustainable” ?

Let me tell you a story (you probably understood now I love that !) : early January, I had the opportunity to spend a few days in the countryside. Following the glyphosate story, I decided, with the gentle pressure of my wife, to resort to a more environmentally friendly way of weeding the yard of the house next spring.

In the section “responsible gardening” of a large distribution chain, I resisted the temptation to rely on my usual “Roundup”, and its less well known equivalent in terms of composition, the “Fertiligène”. Then I turned to so-called “natural origin” products. Forget it ! As soon as you analyze it a little, you find in their composition molecules whose dangerousness is likely.

But for sure, the qualification of “responsible gardening” doesn’t apply to these products (by the way, and even if I don’t pretend to run a blog about gardening, only one solution seems to present no risk : white vinegar).

At a more macro level, the story is more or less the same : if Europe is to mobilise capital at scale for sustainable development, it needs a technically robust classification system to establish market clarity on what is “sustainable”.

Its what the “taxonomy is about :

  • such a “sustainable finance taxonomy” would identify under which conditions or criteria any given investment will contribute to the EU’s sustainability objectives ;
  • such a taxonomy would allow market growth by orientating capital flows towards assets that contribute to sustainable development ;
  • this system should be aligned with the EU’s declared public policy goals, including implementation of the Paris agreement and the SDGs.

For practitioners, behind a word chosen to make sure that citizens don’t understand anything (why this obsession of European regulators not to be understood, I don’t know ! ) :  the mother of all the battles !


Iconography : the actor Christopher Tucker, playing Ruby Rhod’s famous scene “it must be green”, in “The Fifth Element”, a 1997 English-language French science-fiction action film directed and co-written by Luc Besson..


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