On the 18th of January, the European Commission issued a request to the Sustainable Finance Platform (SFP) to “provide advice on financing transition”. The Request identifies 6 questions in need of clarification, and specifically asks the SPF to “provide advice on the existing and potential use of the EU taxonomy framework for enabling the financing of the transition toward a sustainable economy”.
Bellona Europa finds it important to highlight important topics and aspects that must guide the ongoing process of finalising the Sustainable Finance Taxonomy, and therefore welcome the publication of the request. Together with an alliance of NGOs, including Bellona Europa together with Zero Waste Europe, Clean Air Task Force (CATF) and the Environmental Coalition of Standards (ECOS), we have therefore formulated a reply to the 6 questions posed.
The European Commission has a long-standing stated intention to cooperate and engage with stakeholders, experts and civil society, also those outside the SFP, on the topic of the Sustainable Finance Taxonomy. This was most recently stated by the European Commission representatives during the webinar series on the 24th and 26th of February. We welcome the dedication to cooperation with stakeholders also outside the SPF and therefore sent our replies and comments to EU Commissioner McGuinness Tuesday the 16th of March.
Of particular note is the need to clarify that transition finance is amply built into the Taxonomy proposal published by the European Commission last year. We therefore trust that the below 6 recommendations are taken into account in the ongoing work to finalise the Sustainable Finance Taxonomy.
Recommendation 1: The European Commission should seek to mend current information gaps and misconceptions on lacking opportunities for transition finance within the Sustainable Finance Taxonomy
Recommendation 2: The European Commission must recognize the importance of predictability and clearly set sunset clauses and/or trajectories for future development of criteria. Ensuring predictability will in and off itself attract additional capital
Recommendation 3: The European Commission must prevent increased opportunities for greenwashing through the introduction of narrative reporting of lofty future plans for transition not based in actual performance
Recommendation 4: The European Commission must clearly ensure the scientific basis of the Taxonomy, and move away from efforts to reinject subjectivity and normative assessments into the Taxonomy – endangering the project as a whole
Recommendation 5: The European Commission must ensure an efficient and science-based process to identify additional sectors and their contribution to sustainability in line with the Sustainable Finance Taxonomy
Recommendation 6: The European Commission must ensure consistent and harmonized usage of terms outlined in the Taxonomy, reducing confusion and unpredictability in differentiating usage of the terms across EU legislation
Read the full letter and supporting information here.