Green economy: the EP approves the criteria for sustainable investments

Parliament has endorsed the new rules to determine whether an economic activity is environmentally sustainable.

The legislative proposal on sustainable investments sets out six environmental objectives and allows an economic activity to be considered sustainable if it contributes to at least one of them while significantly harming any of the others.

The objectives are:

• climate change mitigation;
• adaptation to climate change
• the sustainable use and protection of water and marine resources;
• the transition to a circular economy;
• pollution prevention and control, and
• the protection and restoration of biodiversity and ecosystems.

Boosting green investment

The establishment of clear criteria on green investments is essential to attract more public and private money so that the EU can move towards the goal of neutrality in its emissions by 2050, as proposed by the Green Deal, but also to avoid “eco-laundering” (when something that is not classified as ecological or sustainable) is classified as ecological or sustainable).

The Commission estimates that Europe needs around €260 billion annually in additional investment to achieve its 2030 climate and energy targets. In a resolution passed on 15 May, MEPs called for investments within the recovery plan following the COVID-19 pandemic to prioritise the green chapter.

“The classification of investments according to environmental sustainability is a fundamental advance, as well as a turning point in the fight against climate change,” said Sirpa Pietikainen (EPP, Finland), responsible for the processing of the text in the Committee on the Environment. “All financial products defined as sustainable will have to prove this on the basis of strict and ambitious criteria,” added Bas Eickhout (Greens/EFA, Netherlands), rapporteur for the Economic Affairs Committee.

Transition and enablement activities

Activities that are incompatible with climate neutrality but are necessary in the transition to a “zero emissions” economy will be classified as “transition or enabling activities”. Your greenhouse gas emissions will have to be at the level of the best results in your sector.

Solid fossil fuels, such as coal or lignite, are excluded, but gas and nuclear power could be labeled as an enabling or transitional activity in line with the principle of “doing no significant harm.”

Next steps

The rules will enter into force after their publication in the Official Journal. The Commission will regularly update the technical selection criteria for “transition and enablement activities”. By 31 December 2021, you will need to review them and define criteria to identify activities that have a significant negative impact.

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Source: European Parliament