Greenwashing of EU Finance Law Sparks Walkout by Experts

Originally published on Transport & Environment.
By Eoin Bannon

Environmental and consumer organizations are pulling out of an EU expert group in protest at the European Commission’s decision to classify destructive forestry practices and highly-emitting types of biomass as sustainable investments. The new rules are not based on climate and environmental science and ignore the recommendations of the EU expert group on sustainable finance, the organizations said.

NGOs Transport & Environment, WWF European Policy Office, BirdLife Europe and Central Asia, consumer group BEUC, and eco-standards advocates ECOS are demanding discussions with the Commission to establish rules that stop the scientific basis of the EU taxonomy law being compromised further. Today, the chairperson of the expert group, Nathan Fabian, joined the organizations in calling for an overhaul of the rules.

Luca Bonaccorsi, director of sustainable finance at T&E, said: 

“The taxonomy law was supposed to be the gold standard of sustainable finance. But the result has been the greenwashing of dirty cargo ships, gas buses, and logging and burning trees. Environmentalists will not come back to the process until the Commission comes back to science.”

The decisions to endorse harmful forestry and biomass projects completely discredits the taxonomy, which is required by law to be science based, the organizations said. The Commission also decided to classify as “sustainable” cargo ships burning highly polluting “bunker” fuel and buses running on fossil gas. It delayed a decision on fossil gas as an energy source until a later stage of the process.

The five organizations have suspended their participation in the expert group to avoid a cover-up of further greenwashing. They called on the expert group’s members and leading MEPs to join their protest. They will resume work when the Commission addresses the demands of the expert group chairperson to protect against political interference.

The Taxonomy Regulation determines which financial investments can be labelled environmentally sustainable. The actual list of environmentally sustainable activities is being drawn up by the Commission and is supposed to be based on recommendations by the expert group of NGOs, financial market companies and EU agencies.

Today the Commission also published its Corporate Sustainability Reporting Directive proposal (NFRD reform). T&E welcomes the revised directive and the introduction of a reporting standard aligned with the Taxonomy Regulation. However, T&E and other expert NGOs are concerned that companies in “high risk” sectors such as mining are excluded and not obliged to report on the sustainability of their business. Also, listed SMEs will be exempt for the first three years of the new law.