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Will the EU achieve a greener and more sustainable economy?
Despite its intimidating name, the Taxonomy Regulation is nothing more than the European attempt to stop greenwashing in the financial sector.
What is ‘greenwashing’?
The practice by which polluting corporations are labelled as ‘sustainable’ thanks to a series of dubious rating methodologies and marketing tactics.
How is this happening?
People want clean investments but funds, banks and insurance companies are selling their own versions of ‘sustainable’. This ambiguity about what is and what is not sustainable has produced a never-ending series of scandals whereby consumers often find out that their money, despite initial promises, is being invested in oil, gas, pesticides, airlines, weapons and nuclear power.
These fraudulent practices aren’t just a violations of consumers’ right to know (and choose) but, ultimately, a betrayal of future generations since they’re robbing them of the green economy they need to thrive: those funds are meant to build a new future for our planet, not fund oil companies.
The taxonomy was always going to upset a lot of powerful lobbies
Although no one thought it could be killed even before it was enacted, that’s what’s at risk of happening this week in Brussels where the EU Commission, the Council and Parliament are negotiating the final version of the new regulation.
Interestingly, at this stage the regulation does not include ‘the list’. It simply establishes the general principles of the law such as its goals, scope, the disclosure requirements, the adoption date, sanctions, etc. The list will be produced at a later stage.
So, how can such a high-level negotiation kill the green list before it even sees the light of day?
The trick is called ‘transition and enabling’ activities. Take cars for example: the green list says that only zero-emission vehicles (ZEVs) should be considered ‘environmentally sustainable’ after 2025. And that’s great. ZEVs, however, need to be produced and need components that might not fall under the category of ‘green’ (for example, mining of rare minerals for batteries). These are activities that ‘enable’ the new green vehicles, so they shouldn’t be penalised. Also, there are businesses that do not qualify as 100% green now but are ‘transitioning’ towards it: imagine Volkswagen shifting its production towards ZEVs in the next 10-15 years.
The general principles are, however, pernicious and were introduced in the regulation by the Council (because governments are being protective of their ‘home industries’).
In practice it has been turned into a loophole, so big it’s hard to see where it starts and where it ends
The fact is that, within the general principles, the case can be made for pretty much anything to be either an ‘enabler’ or ‘transitioning’, and if this very long list of pretty-much anything is mixed with the true green list the result can only be the complete loss of its credibility and usefulness.
The definition of ‘transition and enabling’ activities are being mulled over as we write this article and might be decided during the negotiations on November 20. This obscure debate will affect the lives of everybody. And yet the decision might be taken without most people even knowing what’s at stake.
Or maybe not. T&E is part of a large coalition of NGOs that are trying to salvage this landmark piece of legislation. The coalition has launched a petition signed by nearly 100,000 people in less than a week.
It’s now or never. We must remove the loopholes to ensure big polluters and harmful industry do not slip through the gaps in the debate. If we leave the slightest space to escape then oil, gas, weapons, nuclear and other harmful sectors will dig in their claws and hold back our move to a green and healthy future for planet Earth.