As part of its commitment to the fight against climate change, the European Union has been focusing its efforts on developing legislation to ensure the achievement of climate neutrality targets by 2050. Among these is the entry into force of the Taxonomy Regulation, which is mainly financially oriented and which develops the concept of environmental sustainability to be used by non-financial companies when reporting on their economic activities.
In this context, Pérez-Llorca and the IE Law School have decided to bring together experts in legal and economic matters in a new session of their Chair to discuss new legislation and the main challenges facing both Europe and Spain. The event was attended by Eduardo Arbizu, Corporate of counsel at Pérez-Llorca; José María de Paz, Corporate partner at Pérez-Llorca; Ana Puente, Deputy Director General of Securities Markets and Financial Instruments Legislation at the Spanish Treasury, Ministry of Economic Affairs; and Juan Carlos Martínez Lázaro, Professor of Economics at the IE Law School.
Eduardo Arbizu, who acted as moderator, opened the conference by contextualising the current situation in which the financial sector is playing a fundamental role in reducing the risks of the transition towards a more sustainable economy. In this regard, the Pérez-Llorca of counsel pointed out that “there is a huge amount of regulatory action to come and which is under discussion, such as laws or technical standards that we must continue to pay attention to, as well as legislation that will have to be applied to Spanish law, and this is something that we legal experts will have to work on immediately, as it is a very complex issue”.
In this regard, Ana Puente explained the position of the Spanish Treasury and its experience in drafting the regulatory framework for sustainable finance. More specifically, she discussed the development of European taxonomy to identify economic activities and, therefore, companies that are considered sustainable. With regard to the Taxonomy Regulation, Puente explained how, after various debates on its approach and functioning, “it was designed to be dynamic and to be supplemented over time”. As a result of this dynamism, and in order to make further progress, she indicated that proposals for technical criteria to identify sustainable economic activities with respect to the four environmental objectives other than climate change adaptation and mitigation have now been published. “In the medium term, work will also be carried out on transitional activities and social taxonomy,” she confirmed.
José María de Paz provided a perspective on how this legislation is being handled by non-financial companies. In particular, he emphasised the importance of European taxonomy in establishing companies’ sustainability strategies, stressing that “this regulation will be key as it is codifying the language of environmental sustainability and this will serve as a reference for the European Union in all areas of sustainability”. The Pérez-Llorca partner spoke about where we are today in terms of sustainable finance regulation and how “the construction of this system of rules is already starting to apply to certain companies obliged to publish a non-financial information statement, which this year will have to provide the percentage of their economic activities which are eligible under the Taxonomy Regulation”. From his point of view, this classification represents an important cultural change for companies, which could lead to a reform of corporate governance based on the concept of sustainability.
Finally, Juan Carlos Martínez Lázaro explained how it fits into the current system and how much the change towards sustainable finance could cost with the application of the Regulation, pointing out that “the taxonomy is designed to help finance the EU’s Green Pact, which aims to achieve climate neutrality by 2050”. In relation to the cost of this process, Martínez Lázaro pointed out that “although we cannot know exactly how much it will be, what is clear is that the administrations cannot deal with it alone, so private financing will be fundamental and this is something that makes sustainable taxonomy very important”.
This presentation was followed by a question and answer session in which the speakers discussed how this process of change towards sustainability affects specific sectors such as banking and construction, as well as to give their assessments on the evolution of the strategy and regulations in the field of sustainable finance.