Setback in Europe’s fight against greenwashing in finance
European countries today proposed a two-year delay for the adoption of new rules that define unequivocally what economic activities are ‘environmentally sustainable’. Europe’s transport campaign group Transport & Environment (T&E) says that, despite its best intentions, the EU risks a setback in its fight against greenwashing in financial markets. Moreover, the compromise text negotiated by the Finnish presidency of the EU ambiguously defines ‘low-carbon energy’, which could allow nuclear power to be labelled sustainable at a later stage. Germany, Austria and Luxembourg tried to block the vague wording.
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Substantial private investments are required for the transition towards a ‘net-zero’ (Paris compliant) economy. Sustainable investments funds have been all the rage in the last 10 years and are currently estimated to account for almost one-third of total assets under management ($30tn). However, since portfolio managers are at liberty to determine what is ‘green’ or ‘sustainable’ the reality is that oil, pesticides, airlines, biofuels and other damaging activities are included in ‘sustainable’ portfolios.
A lack of consistency in standards and a series of scandals have undermined the credibility of the sector, widely considered by many as ‘blatant greenwashing’. The EU regulation on sustainable finance is a landmark piece of legislation that could set new global standards in the industry.
Luca Bonaccorsi, sustainable finance and campaigns coordinator at T&E, said: “We don’t need to waste two more years to label EVs as sustainable and, especially, to stop fund managers from selling oil, diesel trucks and airlines as ‘green’. People want clean financial products to fund a sustainable economy and currently they’re being fooled. Our savings must be protected from the alchemy of ESG rating agencies that can magically turn anything into ‘green’. The delay introduced by the Council is unacceptable, and civil society will not stay silent. We truly hope that trilogues will improve things.”
Over 50 NGOs have signed an appeal to support and improve the first two taxonomies, the list of environmentally sustainable activities, compiled by the Technical Expert Group.
Nuclear, a radioactive dossier
Despite the fact that the Technical Expert Group has excluded nuclear energy from the list of sustainable activities in its draft taxonomy, the Council text effectively leaves the door open for a late re-introduction.
Germany, Austria and Luxembourg are opposed to the text, but they haven’t yet managed to recruit more allies, such as nuclear-free Italy, to block it. Green NGOs are likely to wage war on any attempt to re-introduce nuclear energy in the list.
Edoardo Zanchini, vice president at Legambiente (Italy), said: “Italy banned nuclear energy more than 30 years ago. We find it simply absurd that someone includes nuke-stocks in sustainable portfolios. We must support the opposition to the ambiguous Council text and improve it in trilogue negotiations. But where is Italy in all of this? Why haven’t heard Economic Minister Gualtieri, an expert on EU policies, or Ambassador Maurizio Massari voice Italy’s anti-nuclear position?”
Nuria Blázquez, policy expert at Ecologistas en Acción (Spain), said: “Pesticides, biofuels, airlines, oil and mining are being sold as ‘green’: this is an emergency that needs addressing today, not in 2023. Spain must join the anti-nuke front and improve the final text during trilogue discussions . Politics and economics cannot overrule science and the people’s will again and again. The future of energy is in renewables, not in radioactive waste.”
Now the Finnish presidency of the EU will enter into trilogue negotiations with the European Parliament and the European Commission. A final deal and the official passing of the law is expected by the end of this year.