Furthermore, a common taxonomy is essential for a shared understanding of the information disclosed and the definitions of sustainable financial products (such as green bonds).xv Going beyond individual securities, a common approach to the development of benchmark indices is also necessary, in view of the importance of benchmarks in asset allocation.
Accordingly, the first wave of legislative proposals arising from the European Commission’s action plan for sustainable finance tackles these three tasks: developing regulations for a common taxonomy; disclosure; and benchmarking (European Commission 2018).