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Huw van Steenis

Climate Change Won't Be Stopped By 593 Pages of Green Tape

The EU is wasting its lead in setting sustainable finance standards by stubbornly striving to agree on a one-size-fits-all solution.

The energy transition won’t happen if it’s wrapped up in red tape.

The energy transition won’t happen if it’s wrapped up in red tape.

Photographer: Sean Gallup/Getty Images

Financing an innovative low-carbon economy is one of the defining challenges of our age, as Bill Gates argues in his new book. Energy transition will require $3.5 trillion annually — for decades. As we emerge from the pandemic, defining what counts as a green investment around the world will take on even greater significance. It’s crucial to ensuring we really do create a better future from this crisis and avoid falling into the greenwashing trap.

In the race to net zero, the European Union should have a head start in setting those standards given many years of investor interest. Its new rules requiring asset managers to disclose the environmental, social and corporate governance features of their funds started to take effect this month. But the bloc still hasn’t agreed on the list of categories and definitions of what’s green and what’s not — known as the green taxonomy — that’s supposed to underpin the effort, and to become a global standard.