The EU’s Taxonomy Regulation, adopted in summer 2020, aims to accelerate the shift towards a low-carbon economy by defining the criteria for ‘green’ economic activities. The goal is to encourage investment in activities that align with the EU’s environmental targets. Because sustainable financial products will play an increasingly important role in the future, technical assessment criteria for sustainability can have a direct influence on business activities, including the design of business models.
In a recent position paper, IKEM welcomed the EU-wide classification system but pointed to certain provisions that were not sufficiently ambitious. For example, the new criteria classify natural gas power plants as sustainable only if they replace coal-fired power plants – a positive development. At the same time, the regulation fails to impose the kinds of stringent criteria needed to adequately address the issue of nuclear waste disposal – and it burdens future generations by delaying a final decision on nuclear waste storage until 2050.
The Commission plans to review the criteria every three years. This offers opportunities to update and strengthen existing provisions. If Germany is serious about increasing investor confidence, it should seize these opportunities.
