On Monday evening, 11 March, MEPs from the European Parliament's ‘Economic and Monetary Affairs’ (ECON) and ‘Environment’ (ENVI) Committees adopted by 52 votes to 45, with 19 abstentions, the draft report by Sirpa Pietikäinen (EPP, Finland) and Bas Eickhout (Greens/EFA, Netherlands) laying the foundations for the future taxonomy on sustainable finance (see EUROPE 12026/4).
The divisions between political groups, which had led to the postponement of the vote at the end of February (see EUROPE 12197/31), could evidently not be overcome. On several issues, the EPP and ECR groups did not endorse the compromises supported by the S&D, ALDE, GUE/NGL and Greens/EFA groups and tabled a series of alternative compromises - many of which were adopted.
The main stumbling block was the scope of application. The S&D, ALDE, GUE/NGL and Greens/EFA groups wanted to create a category of “investments having a significantly harmful environmental impact” in the text.
The EPP and ECR groups opposed this and proposed instead that the Commission should consider, by 31 December 2021, the need to extend the scope to this category, adding specific criteria, after an impact assessment on the consequences of such an enlargement.
Both compromises were put to a vote, and in the end it was the solution supported by the EPP and ECR groups that won the day.
While the Commission's original proposal only applied to financial products marketed as environmentally sustainable, MEPs also extended the scope to other financial products marketed in the EU, with a 'comply or explain’ mechanism.
Thus, for example, the Regulation would not apply to financial market participants who have provided evidence-based explanations that the economic activities financed by their financial products do not have a significant impact on sustainability.
MEPs also maintained the six environmental objectives contained in the Commission's text to determine whether an economic activity being considered for investment can be considered sustainable. However, they clarified that these objectives are measured using harmonised indicators, life cycle analysis and scientific criteria.
It should be noted that the compromise supported by the S&D, Greens/EFA and EFDD groups to determine the degree of substantial contribution of an economic activity to social objectives was rejected.
A confused and eventful vote
The vote was already looking complicated, given the long list of votes, but the omission of voting cards for Pervenche Berès (S&D, France) and Renate Sommer (EPP, Germany) further disrupted the session. Some compromises had to be voted on several times and produced different results, causing some MEPs to be dissatisfied.
The confusion was such that before the final vote on the report, the co-rapporteur, Bas Eickhout, requested a suspension of the meeting so that each political group could take stock of the final text as amended.
Global Witnessdenounces vote in favour of financial lobbies
In a statement on Tuesday, Global Witness said it was deeply disappointed with the outcome of the vote. “It was a vote in favour of financial lobbyists and ‘greenwashing’ at the expense of people and planet”, it lamented, asking MEPs to strengthen environmental and social objectives in the text or to vote against it in plenary session.
On the other hand, the final text should provide some relief to the EuropeanIssuers organisation, which was concerned about the creation of a category of activities "having a significantly harmful environmental impact", which would exclude certain sectors from access to sustainable and corporate finance, according to the organisation. (Original version in French by Marion Fontana)