IDEAS home Printed from https://ideas.repec.org/a/diw/diwdwr/dwr14-28-1.html
   My bibliography  Save this article

Transitioning to Net Zero: Full Potential of Sustainable Finance Taxonomies Not Yet Exhausted

Author

Listed:
  • Catherine Marchewitz
  • Franziska Schütze
  • Fernanda Ballesteros

Abstract

Sustainable finance taxonomies such as the European Union (EU) taxonomy can support the transition to a climate-neutral economy. As a classification system, these taxonomies serve to offer transparency and guidance as to how capital flows can be shifted to sustainable and environmentally-friendly activities. In this Weekly Report, we analyze 26 sustainable taxonomies from countries and regions around the world using five criteria. Our study shows that although many taxonomies follow a holistic sustainability approach, mandatory criteria have often yet to be developed. The share of a country or region’s emissions that is covered by the taxonomy varies considerably, as the taxonomies follow different approaches for determining the activities that are aligned with them. Taxonomies often only apply to a limited group of market participants and are rarely linked to mandatory reporting obligations. The results emphasize that better coordination between the existing taxonomies worldwide is needed and that the criteria and thresholds for selecting activities in alignment with taxonomies should be in accordance with the Paris Agreement. This way, taxonomies can develop their full potential in guiding the transition

Suggested Citation

  • Catherine Marchewitz & Franziska Schütze & Fernanda Ballesteros, 2024. "Transitioning to Net Zero: Full Potential of Sustainable Finance Taxonomies Not Yet Exhausted," DIW Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 14(28), pages 189-197.
  • Handle: RePEc:diw:diwdwr:dwr14-28-1
    as

    Download full text from publisher

    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.907698.de/dwr-24-28-1.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Sustainable Finance Taxonomy; Green Finance; Transition Finance; EU Taxonomy; climate policy; transition plans;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • P00 - Political Economy and Comparative Economic Systems - - General - - - General
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:diw:diwdwr:dwr14-28-1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bibliothek (email available below). General contact details of provider: https://edirc.repec.org/data/diwbede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.