The effects of climate change do not stop at companies. Scientific climate models predict that climate risks such as extreme weather events will increase in the foreseeable future. To achieve the climate goals and minimise the negative impacts of climate change, the economy must change. Businesses must become future-oriented and seize the opportunities that come with the transformation to greater sustainability. Massive investments are needed for this comprehensive change.
The financial system can play an active role in this by taking environmental, social and governance (ESG) aspects into account in lending and financing processes, thus promoting future-proof investments. This shift towards sustainability in the financial sector is called sustainable finance. To support this process, the EU introduced various sustainable finance regulations, of which the EU Taxonomy is the most well known.