Sustainable Investing

Global Environment: an appraisal against the EU taxonomy

The EU taxonomy will have major implications for investors. By defining which economic activities are compatible with a low-carbon economy, the classification system has the potential to influence capital flows.

Mar 8, 2021

57 minutes

Deirdre Cooper
Graeme Baker
The EU taxonomy will have major implications for investors. By defining which economic activities are compatible with a low-carbon economy, the classification system has the potential to influence capital flows.
EU taxonomy: what investors need to know

The European Union taxonomy, which comes into effect this year, will have major implications for investors – not just in the EU, but worldwide.

By defining which economic activities are compatible with the transition to a low-carbon global economy, the classification system has the potential to direct investor flows into certain sectors and businesses – and consequently change the return and risk profiles of investment portfolios.

Understanding the implications of the EU taxonomy will be a critical skill for investors this year and beyond – both to tap into the multi-year structural growth trend being created by efforts to decarbonise the global economy, as well as to identify businesses likely to face headwinds as climate action intensifies.

In ‘Global Environment: An appraisal against the EU taxonomy’, we offer a portfolio-manager’s guide to what the EU taxonomy means in practice, analysing the Global Environment portfolio through the lens of the classification system. We hope this provisional analysis offers useful insights into this decarbonisation-focused portfolio, as well as into the practical implementation of the taxonomy and the interpretation of alignment assessments.

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Deirdre Cooper
Portfolio Manager
Graeme Baker
Portfolio Manager

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