Status: The Environmental Taxonomy: On 13 June 2023, the European Commission published the so-called TAXO4 delegated acts covering the list of economic activities to be considered as taxonomy-aligned for the four remaining environmental objectives. The Commission also put forward updates to the existing climate delegated acts. Both elements will now need to be endorsed by the European Parliament and the Council.
The Social Taxonomy: The Platform on Sustainable Finance published its final report on the Social Taxonomy on 28 February 2022. The EU Taxonomy Regulation mandated the European Commission to publish a report by 31 December 2021 describing the provisions that would be required to extend the scope of the Regulation beyond environmentally sustainable economic activities. To date, the European Commission has not published such a report.
Finance Watch perspective:
The Environmental Taxonomy: The Taxonomy is the first and necessary step towards the creation of an EU financial legislative framework that aims to reorient capital flows towards a more sustainable economy. Positive aspects of the Environmental Taxonomy include its broad scope, separate disclosure for sustainable, transition and enabling activities, the obligation for large companies to disclose their share of turnover, investments and expenditures that are Taxonomy compliant and finally, the review clause on ex-post assessment of the effectiveness of the Taxonomy. However, Finance Watch is critical of the inclusion of nuclear and gas under the Taxonomy Complementary Climate Delegated Act.
The Social Taxonomy: As the EU’s economy accelerates its ‘green’ transition, support for activities that are socially sustainable is critical to ensure that this same transition is also fair and socially inclusive. A social taxonomy would also reinforce existing EU policy such as the European Pillar of Social Rights, the Equality Strategies, the initiative to eradicate child labour or forced labour. Finally, it would contribute to attaining the Sustainable Development Goals just as the Environmental Taxonomy contributes to the implementation of the Paris Agreement on Climate.
Finance Watch contact: Thierry Philipponnat, Chief Economist (firstname.lastname@example.org)