Commission platform on sustainable finance issues draft recommendations on taxonomy criteria

2021-09-10

The draft report and its Annex present technical screening criteria for a first set of priority economic activities with regard to their substantial contribution to four environmental objectives: sustainable use and protection of water and marine resources; transition to a circular economy; pollution prevention and control; and protection and restoration of biodiversity and ecosystems, as well as the criteria for “do no significant harm” (DNSH). They have been drafted by the Technical Working Group, a dedicated subgroup of the Platform on Sustainable Finance requirements under the Taxonomy Regulation 2020/852. The Technical Working Group has prioritised a wide array of economic activities, such as the manufacture of chemicals, chemical products, plastics, machinery and waste management systems. Chemical recycling is not as such addressed as an economic activity but as part of other activities. For example, the Technical Working Group considers it in the context of one criterion for the manufacture of food products and beverages to substantially contribute to the transition to a circular economy: 85% of its packaging (by weight) consists of, among other options, material fully manufactured by mechanical or chemical recycling of post-consumer material, with claims on recycled content made using a batch level mass balance method. For the manufacture of plastic packaging goods, the draft report includes as a criterion that the goods are 95% mechanically recycled, chemically recycled, biobased or carbon capture and utilisation (CCU) feedstock.

The draft criteria presented in the report are working documents of the Platform and not an official Commission document. They do not represent the final view of the Platform. It might eventually consider economic activities not included in the first-batch of priority activities. Stakeholders can submit their feedback until 24 September. The Platform plans to submit a final report to the Commission in November 2021, and the Commission wants to publish a delegated act with the technical screening criteria for these four non-climate environmental objectives in 2022.

The EU adopted the Taxonomy Regulation as an EU-wide classification system for sustainable economic activities to drive green investments supporting the objectives of the European Green Deal. It entered into force in July 2021, but some of its provisions will be phased-in over the next few years. The EU Taxonomy system creates a list of economic activities with technical screening criteria determining which ones make a substantial contribution to one or more of the six environmental objectives: climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; transition to a circular economy; pollution prevention and control; and protection and restoration of biodiversity and ecosystems, and do no significant harm to any of the others. The Taxonomy Regulation tasks the European Commission with adopting delegated acts that establish technical screening criteria with which the activity has to comply. Earlier this year, the Commission adopted the delegated act on climate change mitigation and adaption. The European Parliament and the Council are examining that delegated act, which is supposed to apply from the start of 2022.

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~sThe National Law Review, 10 September 2021

https://www.natlawreview.com/article/sustainability-outlook-european-union-august-2021