The European Commission on Tuesday updated its sustainable finance taxonomy, tightening its criteria for what counts as green investment.
The new package aims to increase transparency within the EU’s sustainable finance framework by adding new rules for environmental, social, and governance rating providers, the commission announced in a statement.
The move comes after original proposals prompted backlash from environmental campaigners and Green MEPs, who sent a letter to the EU in May. It argued that the classification of aviation and maritime sectors as sustainable is out of line with the bloc’s environmental objectives.
The updated framework states that sustainable aviation fuels must make up 15% of a plane’s fuel mix by 2030 to be considered sustainable, a 5% increase from previous proposals.
However, it still makes special allowances for industries that are fossil fuel heavy and considered more difficult to decarbonise at pace, including aviation. The taxonomy states that aircraft can still be considered sustainable if they meet certain efficiency criteria, even if they operate entirely on traditional fossil jet fuel.
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Tsvetelina Kuzmanova, senior policy adviser on EU sustainable finance at think-tank E3G, told the Financial Times that the expansion of the taxonomy to aviation and shipping, as well as inclusions on water management and biodiversity, was a “welcome step” but that it had to be rooted in scientific evidence. However, some criteria “regrettably continue to be perpetuating business as usual for polluting industries”.
Valdis Dombrovskis, the EU’s trade commissioner, said on Tuesday that sustainable finance was not “only about companies that are already green” but is “also there to help companies that want to transition towards greener activities.”
“This is about some companies that are concerned that they are not yet green enough to qualify for the finance they badly need to become greener,” he added.
The update includes biodiversity carbon offsetting schemes as legitimately green, despite a lack of regulation surrounding the offset market and debate over its genuine impacts on decarbonisation.
“By definition, offsetting is a zero-sum game, so it can’t represent a substantial contribution required to enter the taxonomy,” WWF’s European Policy Office’s Sébastien Godinot told Euractive.
Some business groups have criticised the proposals as going too far, suggesting they burden the EU industry with unnecessary and unattainable bureaucracy.
After the previous framework was announced in April, environmental campaigners sued the EU for violating its own climate laws by labelling gas and nuclear as “green”.