Stockholm (NordSIP) – On Wednesday, April 21st, the European Commission announced that it had adopted the first of the EU Taxonomy Climate Delegated Acts (DA) specifying the details of the EU’s categorisation regarding which economic activities can be described as sustainable. The DA covers the economic activities of approximately 40% of listed companies, in sectors responsible for almost 80% of direct greenhouse gas emissions in Europe, according to the European Commission.
In its announcement, the EU executive described the EU Taxonomy as “a robust, science-based transparency tool for companies and investors. It creates a common language that investors can use when investing in projects and economic activities that have a substantial positive impact on the climate and the environment. It will also introduce disclosure obligations on companies and financial market participants.”
“The financial system plays a crucial role in the delivery of the EU Green Deal, and significant investments are required to green our economy,” Mairead McGuinness, Commissioner responsible for financial services, financial stability and the Capital Markets Union, says. “We need all companies to play their part, both those already advanced in greening their activities and those who need to do more to achieve sustainability. Today’s new rules are a game-changer in finance. We are stepping up our sustainable finance ambition to help make Europe the first climate-neutral continent by 2050. Now is the time to put words into action and invest in a sustainable way.”
The Push Back
Although the European Commission congratulated itself on reaching a milestone that had been delayed since the end of 2020, many stakeholders did not share this optimism. The two main points of contention were biogas and forestry.
“The Commission’s final taxonomy on forestry and bioenergy does not acknowledge the environmental challenges we face,” says Sébastien Godinot, WWF EU economist. “It has been strongly influenced by unbalanced lobbying by Finland and Sweden: it is at odds with environmental science, discredits the taxonomy and creates a disastrous precedent. The EU Council and Parliament must stand up for science and force the Commission to start again from scratch on these areas. In the meantime it must ensure that the flawed Renewable Energy Directive, which the bioenergy taxonomy is based on, is fixed in the current revision process,” Godinot added citing scientific research finds that burning trees for bioenergy increases emissions for decades compared to fossil fuels.
Meanwhile, Birdlife declared the Taxonomy a Greenwashing tool and announced the end to its participation in the advisory Platform on Sustainable Finance group in protest against “the blatant greenwashing the taxonomy would allow.” Ariel Brunner, Senior Head of Policy, BirdLife Europe commented that “by caving in to the pressure of the forestry industries lobby group and their political sponsors in the Finnish and Swedish governments, the European Commission has betrayed science, the European Green Deal and its own legal mandate all in one go. We call on the Parliament and Council to reject the Delegated Act that would shatter the credibility of the EU as a global standard-setter and make green finance just yet another cover for the liquidation of life on earth.”
“Pushing pause on gas might at first sight seem like a compromise deal, but there’s no compromise with nature,” Monique Goyens, Director General at the European Consumer Organisation says. “We are in an emergency situation. The decisions we make now will directly determine whether we can meet our climate goals or not. The proposed rules for sectors like forestry and bioenergy will actively mislead people into making unsustainable investments. The Taxonomy was billed by the EU as the gold standard in the fight against greenwashing. As it stands, the Taxonomy is set to become little more than a greenwashing tool.”
“The EU Taxonomy Delegated Act is a living document, and will continue to evolve over time, in light of developments and technological progress. The criteria will be subject to regular review. This will ensure that new sectors and activities, including transitional and other enabling activities, can be added to the scope over time.”
Once formally adopted, the EU Taxonomy Climate Delegated Act will be scrutinised by the European Parliament and the Council (four months and extendable once by two additional months). The DA will be formally adopted at the end of May once translations are available in all EU languages.