Along with the need to infuse capital into sustainable finance, it is becoming increasingly important for companies and financial stakeholders to clearly define sustainable projects and activities. However, there remains a lack of consistency, transparency, and rigor in the defining criteria and measurement. This lack of clear definitions for sustainable projects and activities is ultimately affecting the credibility of these products.
There has been significant growth in Environmental, Social, and Governance (ESG) investments and sustainable financial products. Many of these ESG and sustainable products do not link to how they contribute to environmental/social objectives. There are no universally accepted transition principles either. In the absence of clear industry standards and transition principles, private capital is not flowing at the pace and scale required to achieve the Paris Agreement's goals.
As a result, many efforts are underway globally to develop taxonomies to classify which activities qualify as a transition as governments seek to implement action plans on sustainable finance. Most of the initiatives are voluntary and industry-led. The various stakeholders supporting this initiative are committed to taking a leadership role nationally and internationally to define the principles and activities related to the transition to a low carbon economy. The Canadian transition-oriented taxonomy covering activities that support a transition to a lower-carbon economy is an example of this commitment.
Click here to read the original article published ESG Global Advisors Inc..
Please give your feedback on this article or share a similar story for publishing by clicking here.
