Comprehensive coverage

Will new regulations be able to help us know if a factory is green or dirty? (document)

The Ministry of Environmental Protection publishes for public comment the draft Israeli green taxonomy, for classifying economic activities according to their impact on environmental goals; The Israeli taxonomy will make it possible to define environmental and climatic effects of economic activities, will allow positive investments for the environment and climate and will prevent greening

Garbage (green wash). Image: depositphotos.com
Garbage (green wash). Image: depositphotos.com

On the way to the climate conference in Sharm el-Sheikh, putting an end to greenwash in the financial-climatic field: the Ministry of Environmental Protection publishes for public comments the draft of the Israeli green taxonomy, for classifying economic activities according to their impact on environmental goals; The Israeli taxonomy will make it possible to define environmental and climatic effects of economic activities, will allow positive investments for the environment and climate and will prevent greening

The Israeli taxonomy was presented today (Wed) for the first time as part of the Climate Solutions Award of JNF Canada, Start-Up Nation Central and the Kimat Israel Foundation and in preparation for the UN Climate Summit COP27 to be held next month in Sharm el-Sheikh

The Minister of Environmental Protection, Tamar Zandberg: "The Israeli taxonomy is real news for Israeli society and the financial sector within it, and is another significant step in the ongoing fight against the climate crisis. Embedding environmental considerations in investment processes will lead to the development of climate technologies and the encouragement of investments in green companies, and will place the State of Israel in line with other countries in the world that have also understood the importance of the financial sector in the fight against the climate crisis. The adjustment of the Israeli standard to the European one is an important signal, and is expected to improve the environmental performance of the Israeli economy"

Director General of the Ministry of Environmental Protection, Galit Cohen: "The Israeli taxonomy, the draft of which we published today, is based on the taxonomy anchored in European Union legislation, which has so far brought a number of major news to the environment in the financial sector. Establishing clear and measurable criteria regarding the impact of the economic activity of companies on the climate, could help the financial sector to engage in the fight against the great crisis of our generation. Creating a uniform standard will avoid confusion (greenwash) and will make it possible to produce an important infrastructure for the development of policies and products in the fields of financial sustainability"

For the draft Israeli taxonomy and methodology: https://did.li/Wnhrl

The Ministry of Environmental Protection, accompanied by a steering team that includes representatives from the financial regulators, the Accountant General at the Ministry of Finance, the National Economic Council and the Ministry of Justice, and with the advice of experts from the European Union and the company Ecotraders, publishes today the draft taxonomy for classifying economic activities according to their impact on environmental goals. The draft was announced today (Wed) for the first time at the Climate Solutions Festival (Start-Up Nation Central), held ahead of the 27th climate conference next month in Sharm el-Sheikh.

A taxonomy in the context of financial sustainability (or ESG) is a document that classifies economic activities according to their impact on the environment, according to clear and measurable technical criteria. The classification allows, among other things, the private and governmental funding sources to define the types of uses that have positive effects on environmental goals ("green taxonomies"), or negative effects on environmental goals ("brown taxonomies").

The field of financial sustainability has been developing at a very fast pace in recent years, but in many situations there is a lack of clarity regarding the question of what constitutes "green finance" that promotes environmental goals. The purpose of the taxonomy is to answer this question by creating uniformity, clarity and standardization, while clearly defining criteria and activities whose funding significantly promotes key environmental goals while not significantly harming other goals.

The document was compiled by Yuval Lester, senior vice president for policy and strategy planning, Dr. Ohad Karni, director of the policy and strategy department, and Gal Tamir, senior regulatory policy center at the Ministry of Environmental Protection.

expansion:

The classification of economic activities is carried out according to six core environmental objectives, among them mitigation, adaptation, biological diversity, circular economy, water resources and pollution control, in accordance with the practice in the European Union.

The classification can help at the level of the financial body itself when it comes to managing its environmental risks by assessing the scope of exposures to different types of activities. In addition to this, the classification can help in the labeling of financial products marketed as green products, and thus taxonomies have interfaces with the worlds of consumer protection and prevention of addiction (Greenwash).

The classification of the Israeli taxonomy is expected to be used by business entities, and in particular financial entities, when they come to examine and evaluate in a standardized way economic activities according to environmental aspects. The classification can be used by financial entities in the process of formulating an investment policy that integrates environmental aspects (as part of ESG considerations) as well as in the development of green financial products. The classification enables the examination of economic activities according to clear and uniform criteria, and is a central infrastructure for the development of the field of financial sustainability and the formulation of policy frameworks that regulate the assimilation and disclosure of environmental and climate considerations.

One of the leading policy makers in this field is the European Union, which published in 2018 for the first time an action plan for the formulation of regulatory and other policy tools. In this framework, the European Parliament enacted in 2020 the taxonomy legislation that requires financial entities and large business entities to examine, evaluate and discover the scope of their green investments.

The European taxonomy, on the basis of which the draft of the Israeli taxonomy was developed, was formulated in a wide-ranging expert consultation process that included all sectors, and went through the legislative processes in the European Parliament and the subsidiary legislation in the European Commission. Although the European taxonomy is not formally binding outside the borders of the Union, it is already evident today that the standard it established has a substantial and broad impact on leading business and financial entities in the international arena. Through an expert platform that operates under the mandate of the taxonomy legislation, the European Union continues to work to develop the taxonomy and is expected, according to the platform's experts' recommendation, to publish in the future also a "red" and "yellow" taxonomy for classifying economic activities according to their negative impact on environmental goals. While the green taxonomy is expected to help create green financial products in a standardized, transparent and measurable way, thus preventing greening, a (future) red taxonomy is expected to help manage environmental and climate risks.

The development of the green taxonomy places the State of Israel together with the advanced countries, and in particular with the European Union, and creates an opportunity for business entities in Israel working to receive funding from European companies or international financial entities, as well as opportunities for the fields of cleantech, fintech and companies that provide environmental data analysis services.

The Ministry of Environmental Protection, accompanied by the steering team, is developing a process of consultation with the public and stakeholders on the draft of the green Israeli taxonomy. To send comments, insights and suggestions, as well as requests to coordinate a conversation with the team coordinating the process, please write to us at this address by January 31.1.2023, XNUMX:taxonomy@sviva.gov.il .

Leave a Reply

Email will not be published. Required fields are marked *

This site uses Akismat to prevent spam messages. Click here to learn how your response data is processed.