What is the EU taxonomy for and where is it?
The European Commission has opened a public consultation until May 3 on four of the six climate and environmental objectives related to the EU green taxonomy, the classification system for European sustainable investments. All the details
The European Union taxonomy, i.e. a classification of economic activities considered to be 'environmentally sustainable', was presented in its general form in 2020 , however, the Commission has since left the definition of the details of the criteria on individual activities to delegated acts.
Delegated acts are a secondary European regulation which does not provide for a legislative discussion but only gives the two co-legislators of Parliament and the Council four months of time, extendable to six, to reject it with different majorities, without the possibility of amending it.
Now, public consultation has been opened for four of the six climate and environmental objectives to arrive at the publication of the latest delegated act.
THE FOUR OBJECTIVES OF THE CONSULTATION
The four climate and environmental objectives on which it is possible to pronounce until 3 May concern: the sustainable use and protection of water and marine resources; the transition to a circular economy (“reuse, repair, recycle”); the prevention and reduction of pollution; and the protection and restoration of biodiversity and ecosystems.
The other two objectives envisaged in the EU taxonomy are climate change mitigation and adaptation.
WHAT AN ACTIVITY NEEDS TO BE ECO-SUSTAINABLE
To be considered eco-sustainable, Eunews explains, an economic activity must satisfy four conditions: make a substantial contribution to at least one of the six objectives; not cause significant damage to any of the other five environmental objectives (therefore, respect the principle of ' do not significant harm '); comply with the minimum guarantees and technical screening criteria set out in the taxonomy delegated acts.
THE COST OF SUSTAINABLE FINANCE
“The taxonomy – explains Il Sole24Ore – provides the basis for the European Green Bond Standard, which defines the criteria to be met in order to issue 'green' bonds, ie destined to finance sustainable activities: these must be aligned with the taxonomy”.
The goal, which is part of the EU's Sustainable Finance Strategy, is in fact to direct financial investments towards economic activities that can contribute to the environmental transition. It is no coincidence that the EU Commission describes the taxonomy as "a practical guide for politicians, businesses and investors on how to invest in economic activities that contribute to having an economy that does not negatively impact the environment".
Until now, in fact, recalls Il Sole , if an investment has been deemed ESG (Environmental, Social, Governance), or compliant with sustainability criteria, market initiatives have established it, which could however favor the phenomenon of greenwashing and, therefore, a cosmetic environmentalism only.
"The EU Commission – states the business daily – has estimated that the achievement of the objectives set in the process towards a more environmentally friendly economy (Agenda 2030) requires annual investments of approximately 520 billion euros: public resources are not enough, it is necessary mobilize private ones as well”.
THE PROCESS AND THE TAXONOMY SLOWDOWNS
Following the publication of the general regulation in the EU Journal in June 2020, the European executive presented in April 2021 the first delegated act of the taxonomy which concerned the first two of the six objectives (mitigation and adaptation to climate change) with reference to more than ten sectors, from renewable energy to forestry via building renovation and transport.
Under pressure from industries and Member States on the matter, on that occasion, Eunews recalls, the European Commission chose not to decide on gas and nuclear energy, which also fall within these first two objectives, on which however it finally pronounced itself in favor – not without dispute – in the second delegated act of February 2022.
Now is therefore the time to decide the criteria on the remaining objectives with a final delegated act, so that they enter into force before the end of the legislature in 2024.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/a-cosa-serve-la-tassonomia-ue-e-a-che-punto-e/ on Sat, 08 Apr 2023 05:53:00 +0000.