On February 2, the European Commission approved the inclusion of fossil gas and nuclear in the EU sustainable taxonomy. This decision has yet to be approved by the European Council and parliament. But for the commission, it was seen as the price worth paying to overcome the lobbies of pro-gas and nuclear countries and their industries, albeit while incurring harsh criticism from its own sustainability experts (“EU lawmakers plan last-ditch effort to reject Brussels ‘green investment rules’, ReportFT.com, February 7).
It is very rare for EU leaders to get involved in using “delegated acts” – a backdoor route that must not modify the meaning of primary legislation. But French president Emmanuel Macron and Olaf Scholz, the German chancellor, among others, felt it necessary to do so in this case.
For their part, gas and nuclear advocates needed to be able to brand their products as green.
But “taxonomy-aligned” fossil gas power can emit from 16 to 38 times more greenhouse gases than wind and there is no assurance that nuclear energy and nuclear waste will not have a “significantly harmful” impact on the environment.
The past few months of this taxonomy conundrum have made clear that financial institutions that use the taxonomy to brand their support for gas or nuclear as sustainable will be exposed as greenwashing.
Financial institutions should heed the lessons from the commission’s own mistakes and stick to the “science-based” spirit of the EU taxonomy regulation. If they are serious about contributing to the climate transition, they must exclude gas and nuclear from any fund or bond marketed as “sustainable” or “green”.
This should include funds classified under the Sustainable Finance Disclosure Regulation (SFDR), which came into effect in March last year and which requires financial companies to manage the sustainability risks of their activities and the impact these have on the environment and on people.
Regulation Analyst, Reclaim Finance Paris, France