In October 2021 the Bank for International Settlements (BIS) released a paper defining a “taxonomy of sustainable taxonomies”. Key policy messages emerging from the BIS analysis are:

• An endeavor that taxonomies correspond to specific sustainability objectives;

• Encourage the development of transition taxonomies and focus alignment with the objectives of the Paris Agreement;

• Monitor and supervise the evolution of certification and verification processes; and

• Shift to mandatory impact reporting for green bonds.

CDP, with the help of Bain Consultancy, analyze the existing sustainability finance taxonomies and identified several elements that can help classify sustainable finance taxonomies. These elements are clustered under three main categories named objectives, scope, and details. This analysis also helped to identify the prioritization criteria of which taxonomy should be integrated into the CDP disclosure system by including the number of companies affected by the disclosure standards and whether disclosure of the taxonomy is mandatory or voluntary.

Regarding the mandatory environmental, as highlighted in CDP’s Shaping High-Quality Mandatory Disclosure policy brief, mandating disclosure of environmental information from both companies and financial institutions supports several goals including de-risking investment, fighting greenwashing, and allowing countries to develop better policies that support the achievement of their Nationally Determined Contributions (NDCs).

CDP will accelerate the implementation and rollout of disclosure standards. In order for CDP to continue its role in the implementation of standards, it should make necessary changes in the questionnaires, so that they will reflect the mandatory ESG disclosure requirements that are and will be introduced by countries. For this purpose, in this policy brief, The EU Taxonomy is used as a case study to detect the significant findings for the mapping. 

After this case study and the introduction of many findings, the report CDP concludes with several policy recommendations. 

To take a look at the findings and policy recommendations of CDP, please click here.