European heads of state and the European Parliament have reached an agreement that codifies the criteria for permitted carbon emissions of investment portfolios, known as the taxonomy, for universal use by investors across the Continent. The classification system will be adapted in two European fund management frameworks. This very interesting news came to us from Pensions & Investments in their article, “EU adopts universal taxonomy aimed at helping investors reduce carbon emissions.“
This long awaited taxonomy will be formalized in the form of a regulation by the end of December 2020, giving investors and managers more than a year to adapt portfolios.
For those committed to preserving the environment, the taxonomy will help investors determine to what extent their portfolios align with the European Union’s overall goal to reduce carbon emissions to zero by 2050. This is a good thing. The taxonomy will help environmentally-conscious investors decide in which companies to invest their dollars. It also creates a system of accountability.
Melody K. Smith
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