No agreement could be reached under the Romanian Presidency of the Council of the EU on the regulation laying the foundations for the future taxonomy on sustainable finance, which will assess, sector by sector, the environmental sustainability of economic activities (see EUROPE 12026/4). In a progress report, the Romanian Presidency invites the Member States' ambassadors to the EU (Coreper), at their meeting on Wednesday 26 June, to take note of the progress made.
The Presidency explained that it had presented a non-paper (a series of thematic documents) to guide discussions on the development of technical screening criteria for the taxonomy, the Platform on Sustainable Finance and the involvement of Member States in developing and maintaining the taxonomy. But “during the four Working Party meetings the main political concerns of Member States have crystalized”, the report, dated 24 June, states.
The proposed Regulation merely lays down the principles and general scope of the future taxonomy. As a second step, it is foreseen that the Commission will establish, by means of delegated acts, the technical criteria on the basis of which it will be possible to determine whether and to what extent an economic activity is environmentally sustainable.
The blockage comes from the fact that several countries, including Germany and France, want this to be done through implementing acts so that national experts are more involved in developing the criteria, a European source told EUROPE on Tuesday 25 June.
However, this poses a legal problem, since, while delegated acts by their nature complement a basic regulation, implementing acts simply have to execute the regulation. Therefore, if this route were to be chosen, the regulation would have to be much more precise.
Among the options proposed, the Presidency had also suggested that the process of developing the technical screening criteria could, in the first phase, be applied as non-binding guidelines and then be followed, in the second phase, by delegated acts.
The involvement of national experts in decision-making is also linked to governance and in particular to the Platform on Sustainable Finance, which will replace the Commission's technical group of experts and will support the Commission's work in preparing delegated acts. The Presidency has tried to improve the representativeness of the platform in the text and has added a provision asking the Commission to transmit any assessments and reports of the Platform to the Member States Expert Group.
In addition, in these various documents, the Presidency suggested extending the scope of the taxonomy to economic activities that enable another economic activity to improve its environmental performance in relation to one or more of the six environmental objectives defined in the taxonomy. It also proposed to include economic activities that contribute substantially to climate change mitigation where they support transition to a climate neutral economy.
Further discussions are needed, in particular, on the process of developing and applying technical selection criteria and how disclosure obligations could be applied if they are maintained in the text, the Presidency said.
Romania is handing over the baton to Finland, which will hold the Presidency of the Council of the EU from 1 July and intends to make this issue one of its priorities. See the report: https://bit.ly/2KCflqg (Original version in French by Marion Fontana)