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Sustainable Investing

European Green Deal

The European Green Deal is a commitment by the European Union to meet the goals of the Paris Agreement, principally by making the 27-nation bloc carbon neutral by 2050. As such it contains a wide range of policy initiatives with the main aim of decarbonizing member states.


Its first target is to achieve a 55% reduction in greenhouse gas emissions compared to 1990’s levels by 2030. Such is its level of ambition that European Commission President Ursula von der Leyen has described it as Europe’s “man on the moon moment”, as Europe would become the world’s first carbon-neutral continent at the current projections if the 2050 target is met.

Achieving these goals means reviewing current laws and creating new ones regarding issues such as compulsory decarbonization for high-carbon companies, and new regulatory frameworks for previously high-emission agricultural practices. New frameworks are planned for funding these changes, including the Sustainable Finance Action Plan, which will encourage more sustainable investment across the bloc, and the Sustainable Finance Disclosure Regulation, which will enhance reporting on how investment strategies use ESG for portfolio construction.

Returns that benefit the world we live in

Carbon initiatives

Other initiatives include a Carbon Border Adjustment Agreement to punish higher-emitting member states, and an Emissions Trading System, under which carbon quotas can be swapped to level out incongruities between nations. The current Energy Taxation Directive, which monitors subsidies for fossil fuels, is being revised.

There will also be a greater emphasis on moving to a circular economy, protecting biodiversity, and improving the energy efficiency of all buildings. The EU aims to increase the amount of forested land across its territory to act as a carbon sink, and will encourage investment in shared mobility, electrified transport systems and bio-based technologies.

Overall, the Green Deal will be funded through the InvestEU program which envisages EUR 1 trillion being spent by member states over the next decade. One estimate sugggests that achieving carbon neutrality by 2050 will require at least EUR 230 billion in annual investments into lower-carbon business models by 2030.

See also:

Sustainable Finance Action Plan
Sustainable Finance Disclosure Regulation
EU Taxonomy


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