A discussion is ongoing on a differential prudential treatment of bank exposures, based on the climate implications  19 20  21  22  23  24  Schnabel I. (2020), ‘When markets fail – the need for collective action in tackling climate change’.
Financial products distributed in the EU will have to demonstrate that the underlying investments are taxonomy-compliant in order to be labelled as ‘sustainable’. To foster the adoption of the EU taxonomy, companies subject to the EU Non-Financial Reporting Directive will be required to disclose whether, and to what extent, their activities are taxonomy-aligned. See I. Monasterolo (2020), ‘Climate Change and the Financial System’ Annu.