Sharp criticism against Taxonomy proposal

Today was the last day for input to the European Commission’s draft delegated acts on the so-called ”Taxonomy”, the EU’s classification system for sustainable activities. The system creates a common language for how different types of investments are to be assessed in a climate change perspective.

In the proposal for delegated acts, it is clarified in detail which criteria should apply when assessing whether an economic activity, without other adverse environmental effects, could be considered to contribute substantially to climate change mitigation and adaptation.

Kommuninvest has, together with its Nordic sister organisations Kommunalbanken and MuniFin, developed a common Nordic position on this issue. This position has now, with small adjustments, been submitted by the three organizations individually to the European Commission. 

Kommuninvest, like Kommunalbanken and MuniFin, are in general terms positive towards the Taxonomy. However, the European Commission’s draft involves some relatively serious problems.

This primarily has to do with the fact that the total burden on the Taxonomy would, with this proposal, be too high, in terms of excessively demanding criteria requirements, a non-proportional administrative load and non-consideration of regional contexts. In addition, the proposal does not ensure technology neutrality and disregards numerous sustainable economic activities.

If these problems are not solved, the consequences could be severe. The risk is that the project owners, in the case of Kommuninvest the Swedish municipalities and regions, could find the burden to be unreasonable and instead opt for traditional borrowing. In the long run, this could lead to investors having significantly fewer sustainable assets to invest in. Then the market for sustainable investments could be substantively weakened.

– It is important that the European Commission reconsiders its proposal on some crucial points. While it is essential that the Taxonomy is ambitious, it must at the same time be reasonable to adhere to it. If the Commission really wants to promote a market for the financing of sustainable growth, which could contribute positively in the green transformation, they need to make some thorough changes to this draft, says Björn Bergstrand, Head of Sustainability at Kommuninvest.

The feed-back of the three organisations can be found here: