[...] The European Commission's so-called “taxonomy” for classifying green investments should address three important questions. Unfortunately, the Commission's one-dimensional approach disregards two of the three, with potentially damaging consequences.
The Commission’s focus on the question of which economic activities are sustainable entails defining and listing all activities that contribute to the energy transition, such as generating renewable power or producing electric cars. The main debates have centered on the potential inclusion of nuclear power or natural gas, and whether to define “shades of green” rather than adopt a binary system.But the EU taxonomy also should address a second big question: Which green activities face a financing gap? After all, from an environmental perspective, the sole purpose of reorienting financial flows toward such activities is to bridge a funding shortfall. And not all sustainable activities listed in the proposed taxonomy are necessarily underfinanced.
Finally, the Commission has disregarded the evidence concerning the question of which financial instruments and products effectively influence the real economy.
Full article: The EU’s Risky Green Taxonomy | Jan 31, 2020 | by Stan Dupré