EU countries split over green investment taxonomy

Posted on October, 22 2019

Some want nuclear power classed as 'sustainable'.
Brussels, Belgium - 22 October 2019
What’s happening?
On Wednesday 23 October, the European Parliament will start negotiations with the Council and the European Commission over a new classification system for sustainable investments. This is known as the EU taxonomy. 

Why does it matter?
The aim of the taxonomy is to show which economic activities are sustainable to help guide investors and prevent greenwashing. If it works properly, it would be a crucial tool for shifting billions of Euros from dirty to clean investments. 

The European Parliament adopted a position in March which, though weakened by less progressive parties, is the most ambitious of all the institutions. The Council has a fairly conservative position, but Member States are completely split over several critical issues - for example, whether nuclear energy should be included as “sustainable”. It is crucial that the Parliament, and forward-looking Member States, stand firm. 

Sébastien Godinot, Economist at WWF European Policy Office said:
“Nuclear power is not sustainable - ask anyone who lives near Chernobyl or Fukushima. The French government and its allies need to withdraw their disgraceful support for nuclear or the taxonomy is dead in the water, because no clear-headed investor will touch nuclear with a barge-pole. On this, and on the other critical issues, MEPs must hold firm to their position, to ensure we have a taxonomy which works.” *

What are Member States in disagreement over?
- On whether nuclear should be included. Austria, Germany, Luxembourg, Italy, Greece and Cyprus all want nuclear out of the taxonomy.
- On whether the taxonomy has only two categories - ‘green’ activities and ‘other’, or several which look at degrees of sustainability, covering the full economy. France, supported by Luxembourg, the Netherlands, Slovakia, Germany and Malta, want a full taxonomy.
- On how far investors need to disclose their taxonomy alignment for green funds only or for all funds. France, the Netherlands, Italy, Portugal and Belgium favour fuller disclosure.
- On the timeline for the first part of the taxonomy, which covers climate. Austria, Portugal, the Netherlands and Sweden are pushing for faster implementation. 

What is the European Parliament’s position?
It’s not perfect, but it’s more progressive than that of the Council. The European Parliament supports the taxonomy only labelling fully ‘sustainable’ activities. But it also includes a crucial review clause to expand the taxonomy to unsustainable activities. It also does not want any nuclear, or coal and high-carbon activities to get the ‘sustainable’ rating. Finally,it wants investors to disclose the degree of taxonomy alignment for all funds, and to only market as ‘sustainable’ those funds fully aligned with the taxonomy.
What does WWF want?
WWF is calling for a taxonomy which gives every economic activity a ranking from dark green to red, a bit like the Energy Efficiency label you see on fridges. This would help companies to make their business models sustainable and investors to make environmentally-sound choices. What’s more, to make a difference this rating must be publicly available - known as ‘disclosure’. 
Last month, WWF and over 50 organisations jointly launched a statement with ten priority issues on the EU 'taxonomy' for sustainable investments.  
More information:
*See for example this report from BNP Paribas, which says [WWF’s italics]: 
“For clarification purposes, the following sectors are excluded from the BNP Paribas Green Bond Framework: defence and security, palm oil, wood pulp, nuclear power generation, coal-fired power generation, unconventional oil & gas, mining and tobacco.”

Sébastien Godinot
Economist, WWF European Policy Office
+32 489 46 13 14

Sarah Azau
Media Manager, WWF European Policy Office
+32 473 57 31 37
A banner protesting against a proposal to build a massive nuclear dump in the Lake District to house all of the UK's nuclear waste.
© Global Warming Images / WWF