A number of environmental organisations have withdrawn from a major European sustainable finance programme, citing the use of weak and unscientific criteria.
WWF, Birdlife and other NGOs have suspended their participation in the European Commission’s Sustainable Finance Platform in protest at the standards set for bioenergy and forestry in the EU’s taxonomy for sustainable activities published today.
“Independent experts cannot simply be used as a smoke screen for political decisions that have no connection to evidence,” said Ariel Brunner, senior policy head at BirdLife Europe. The groups accuse the EC of caving in to pressure from forestry and other lobby groups to allow practices that damage biodiversity on a large scale to be classified as sustainable for financing purposes.
The EU taxonomy’s delegated act – setting out which economic activities and sectors can be classed as sustainable – has been delayed several times and subject to intense lobbying. Originally intended as a science-based exercise, critics have made the charge that economic and political pressures have pushed the EC to water down the science to allow unsustainable activities to be labeled as sustainable.
A series of leaks has also suggested the inclusion of new fossil gas construction and aviation in the taxonomy, alarming climate advocacy groups. However a decision on these and other sectors has been postponed and will be published in a complementary delegated act.
The dilution of the scientific credibility in the new taxonomy will weaken its legitimacy, and has important implications beyond Europe. The development of a definitive list of sustainable activities is being watched closely around the world, as governments, central banks and financial regulators seek to green the financial system. Many countries are developing their own sustainable taxonomies, and China has revealed it is cooperating with the EU on green investment standards.
The legislation will now go before the European parliament, where it is expected to encounter significant opposition. “The EU taxonomy was supposed to be the gold standard of green investments, but it looks set to become a greenwashing exercise,” said Ariadna Rodrigo of Greenpeace, calling for MEPs to reject the EU taxonomy and rewrite the rules for forestry and bioenergy activities. “Green finance cannot be a lifeline for polluters. It must focus on the restoration of forests and the deployment of genuinely renewable energy sources.”
Many emerging policies for central bank alignment with the Paris Agreement rely on taxonomies. The Network for Greening the Financial System has identified “a clear taxonomy around green, non-green, brown and non-brown activities” as a prerequisite for deepening its analytical work on risk differentials between different types of assets.
This page was last updated April 29, 2021
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