On 30 March 2022, the EU Platform on Sustainable Finance released a report with recommendations on technical screening criteria for the four remaining environmental objectives of the EU Taxonomy. This report is the culmination of over 15 months of work by the expert-led Technical Working Group (TWG). Its recommendations seek to supplement and extend the screening criteria of the EU Taxonomy Climate Delegated Act which entered into force on 1 January 2022.
To help achieve the goals set out by the European Green Deal, this first delegated act covers sustainable activities and their screening criteria for climate change adaptation and climate change mitigation. These are the first two of six environmental objectives as defined in the Taxonomy Regulation (Art. 3).
The four remaining environmental objectives that complete the set covered under the EU Taxonomy are detailed in the newly released report:
· 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.
A webinar took place to accompany the release of the report. After an introduction by Nathan Fabian, chair of the Platform on Sustainable Finance, co-rapporteurs Marzia Traverso and Ben Allen spoke about the Technical Working Group's methodology, as well as some of the challenges of defining technical screening criteria for the four remaining environmental objectives. They were joined by experts of the TWG, Anna Creed, Michiel Desmet and Linda Romanovska, each head of their own sector, for a panel discussion and subsequent Q & A session.
A key challenge for the TWG, according to Ben Allen, was presented by the interconnectedness of all six environmental objectives, which had to be evaluated not only individually but also in relation to each other and in the ways they overlapped.
Michiel Desmet pointed out that his area of expertise, the transition to a circular economy, presented a system change, which was difficult to capture in one single metric. As such, it was essential to make use of the full range of "levers" towards a circular economy, ensuring that incentives are aligned and point towards the same direction.
Anna Creed, heading the development of technical screening criteria for the protection and restoration of biodiversity and ecosystems, described the complexity of this field, which brought with it a large volume of criteria. She stressed the importance of creating consistent technical screening criteria to avoid the phenomenon of "criteria-shopping".
Finally, Linda Romanovska, leading the work on the criteria for climate change adaptation, drew attention to the fact that there is almost no economic activity that will not be affected by climate change, underlining the need for a unified EU taxonomy to achieve a more resilient economy.
It is important to note that the 125-page report on the work of the TWG and its 600+ page annex of technical screening criteria is only a recommendation put forth to the European Commission. It will be reviewed by the Commission and could become the foundation for the next delegated act, which would then cover the remaining four environmental objectives, as well as some additional criteria for climate change adaptation and mitigation.
Work continues on 18 additional technical screening criteria, which are set to be released in May as a supplement to the current report.
The European Commission is expected to respond by the end of 2022.