This month, Europe has to take important decisions on the European taxonomy, the EU's list of sustainable economic activities. The taxonomy determines which investments are considered 'green' and can be presented as such to the market. This promotes transparency, counters greenwashing and drives the shift of capital towards the sustainable economy of the future. A development that we as financial institutions wholeheartedly support. However, it is important that Europe sticks to the original principles of the taxonomy, now the decision needs to be made whether natural gas and nuclear energy will be included as ‘green’.

The structure of the taxonomy stipulates that objective, scientific criteria determine whether the  activities are sustainable. Economic activities must be in line with the global target of a maximum temperature increase of 1.5°C. The criteria will be expanded in the next step. An activity that is classified as sustainable may not harm water quality, biodiversity and human rights. In addition, it must prevent pollution and it should be circular.

The taxonomy is not about the question of what may or may not be invested in. Member States remain free to choose their own energy mix. The taxonomy is intended to make it clear to private customers what is a green investment and what is not. The only advantage for the activities (besides clarity for the sustainable investor) is that a sustainable classification might lead to financing on more favorable terms. That should also be the incentive to realise these activities instead of non-green alternatives.

Several Member States are now pushing to label the use of natural gas and nuclear energy as 'green'. This means that the objective-scientific character of the taxonomy is being ignored. In the elaboration of the taxonomy, the European Commission has established that, based on scientific insights, natural gas and nuclear energy are not green investments. If the Member States now decide otherwise, a politically driven taxonomy will be created that seriously undermines the aim of transparency in the financing market.

It also does not bode well for the next steps in the development of the taxonomy. In principle, the role of natural gas and nuclear energy in the transition to a sustainable, carbon free economy should not be decided within the framework of the taxonomy. Labeling these activities as sustainable would violate the criteria set for green economic activities.

As a compromise, it is conceivable that a separate transition taxonomy is developed, a direction that Spain is proposing. In any case, the EU must opt ​​for a taxonomy that does justice to transparency, scientific substantiation and due care. Europe has promised the world leadership in tackling climate change. It's time to show that here.

Bianca Tetteroo (Achmea), Jos Baeten (ASR Nederland), Jack Julicher (ASR Vermogensbeheer), Frank Kusse (Actiam), Bas Jan Blom (ASN Impact Investors), Arie Koornneef (ASN Bank), Jeroen Rijpkema (Triodos Bank), Dick van Ommeren (Triodos Investment Management), Martijn Gribnau (de Volksbank).