Interested in this kind of news? Receive them directly in your inbox. Delivered once a week. Sign Up Although the practice of labelling investments as ethical goes back over 30 years and has always included environmental options, no agreed definition exists for what counts as ‘green’ or ‘sustainable’ in financial markets. The result is that banks and rating agencies are free to define what a ‘sustainable investment’ is, leading to “ethical and sustainable money” being invested in projects that aren’t green at all. The Global Sustainable Investment Alliance (GSIA) says around 14 trillion US dollars have been invested in Europe, of which almost 50% are considered ‘sustainable investing assets’. The Commission therefore charged a group of technical experts with developing an EU classification system for identifying environmentally sustainable economic activities for investment purposes, to be known as ‘taxonomy’. The group has now published a draft list of projects that can be deemed ‘green and climate proof’, and this list could become the gold standard for sustainable finance by directing investment money into the transition to a climate-friendly economy. T&E’s sustainable finance officer Sam Kenny said: ‘The market for sustainable finance is booming but, with a lack of consistency or oversight, banks and rating agencies are prone to diverting money to dirty fossil fuels and other investments incompatible with the Paris Agreement. There is a need for better government involvement to ensure that “green” financing is not closer to a shade of brown, so this report is a step in the right direction.’ The report covers all sectors, such as agriculture, forestry, construction, energy sources, communications, and transportation. As transport operations consume one-third of all energy in the EU, and the bulk of transport energy comes from oil, the technical experts were keen to identify which transport projects were legitimate targets for investment as a result of their capacity to reduce greenhouse gases and be part of a sustainable industry landscape. The draft list of transport projects that should attract sustainable investment includes only cars with no tailpipe emissions, such as electric and hydrogen vehicles, from 2026. It excludes airports or any other project promoting aviation. Land transport that emits no direct emissions, like underground rail, tram, trolleybus, bus and rail, are eligible, as well as bike lanes and public recharging stations for e-vehicles. However, T&E says the report’s listing of so-called ‘biofuels’ is a significant flaw. The list allows for trucks, buses, and inland ships running on certified low indirect emission (ILUC) biofuels to be classifiable as ‘green’ if it is a 100% blend. This would mean certified palm oil diesel could receive green funds. ‘Including biofuels risks jeopardising the credibility of the entire EU taxonomy,’ said Kenny. ‘It needs to be taken out.