Provisioning Systems

“The EU’s new sustainable finance strategy and Green Bond Standard show what is at stake. Their aim is clear: to help create the first climate-neutral continent by 2050. But the way that sustainability is defined will determine whether such schemes succeed or fail.”

“investment-level classification: how can investments with good system-level impacts be separated from those with bad ones?”

“this can only be achieved with a degree of central planning.”

“Tackling climate change requires transforming at least five provisioning systems: energy, transport, buildings, industry and agriculture. The price mechanism struggles with coordinating rapid transformation at this scale.”

“Instead of waiting for the market to speak, a planning body — whose composition and accountability require careful consideration — should formulate plans for each of the five systems, which should then be translated into project-level criteria for sustainable investments.”

“The EU’s sustainable finance strategy represents this approach in embryonic form. Its heart is a taxonomy: a list of criteria that individual activities, such as electricity generation or construction, must meet in order to be considered sustainable.”