September 25, 2020

Sizing the green economy: Green Revenues and the EU taxonomy

The greening of the global economy presents significant opportunities to investors. However, investors and policymakers face a common challenge: How can green business activities be systematically identified, categorised, and measured across diverse sectors, supply chains and asset classes to mobilise investment at scale? The EU Taxonomy is an ambitious regulatory initiative that aims to address this challenge, with regulation set to come into force in January 2022.

The EU Taxonomy has set out a catalogue of green criteria, leaving markets to assess individual companies against these criteria. This paper explains the need for green taxonomies, summarises the development of and approaches taken by the EU Taxonomy and the FTSE Russell Green Revenues Classification System (GRCS), and examines the overlaps and points of difference between the two approaches. Crucially, it explains how Green Revenues data model can provide a stepping stone for investors to comply with the requirements of the EU Taxonomy regulation.