After long negotiations in the European Parliament, EU officials expect on Thursday the finalisation of the “EU taxonomy for sustainable finance” regulation that will provide a common set of standards determining whether an economic activity is environmentally sustainable.

In an effort to become the first supranational regulator to provide a regulatory framework for banks and funds to comply with when launching “green” products and investments, the EU is ready to agree on a deal that creates the so-called Green Gold Standards.

With the new regulation for environmentally sustainable economic activities, institutional investors and asset managers would need to go through the technical screening criteria, to justify how environmentally sustainable, a debt instrument or a fund is.

For Ursula Von der Leyen, sustainability and engagement for the fight against climate change have been in the heart of the new Commission’s priorities. As the Union has stated its commitment to meeting the Paris agreement targets, the new Commission has set the ambitious plan of making Europe the first climate-neutral continent by 2050.

The new EU Commission President expressed her hopes that the new regulation will unleash private investments that will contribute to the transition process to a low-carbon, resource-efficient economy.

Under Jean-Claude Juncker‘s Presidency, the EU Commission had published in 2018 the Action Plan on financing sustainable growth, to integrate sustainability considerations into the EU’s financial policy, foster transparency and to mobilise capital for sustainable growth.

Sustainable finance is considered by the new EU Commission essential both in safeguarding the planet’s future and making the financial sector an indispensable part of the green transition.

Until now, there is no global benchmark that addresses the risk of greenwashing, as funds and banks can sell and label sustainable finance products without an independent arbitration mechanism examining the accuracy of the labelling.

EU commission Vice-President of “An Economy that Works for People”, Valdis Dombrovskis has called taxonomy the “single most important piece of legislation” pointing at markets that can help governments meet global emission targets.