

Only three EU companies have said they meet the bloc’s green taxonomy criteria for natural gas, according to data compiled by Responsible Investor and Morningstar Sustainalytics.
They are German utility EnBW Energie Baden Württemberg, along with chemicals manufacturer CIECH and green energy supplier Polenergia from Poland. Seven Article 8 ESG funds have invested in CIECH, while EnBW and Polenergia are listed in one Article 8 fund each.
This is the first year that EU companies face mandatory requirements to disclose the share of their revenue, operating expenditure or capital expenditure that is compliant or aligned with the green taxonomy.
A further 38 companies have said they meet some of the taxonomy’s criteria for sustainable gas operations but fall short of full alignment. These include energy giants Shell, Repsol, Total, Iberdrola and Enel.
Activities that support an environmental objective but do not fulfil the taxonomy’s strict emissions threshold, social safeguards or harms another environmental are considered “eligible” under the framework.
The data could quell fears over the rigour of the taxonomy’s natural gas criteria following the EU’s controversial move to reclassify gas and nuclear power as sustainable activities in 2021. It may also provide an early indication of the gap between current market practices and what the EU considers to be sustainable, and help track improvements over time.
Unlike nuclear power, which is expected to make up a bigger share of the energy mix going forward, the use of natural gas for power generation or heating/cooling will need to decline or approach carbon neutrality if the world is to meet its climate targets.
Under the taxonomy, gas plants can apply a higher emissions threshold of 270g CO2e/kWh – as opposed to the 100g CO2e/kWh limit for other taxonomy activities – as long as they are replacing coal and oil. But meeting both conditions at the same time may be a struggle for companies, said Morningstar Sustainalytics ESG product manager Anca Latin.
Gas plants are also seen as transitional facilities and must switch completely to renewables or low-carbon gaseous fuels by the end of 2035, she added.
“The requirements are technically feasible in the next five to 10 years. Research shows some companies are still assessing and trying to figure out what is the best way to align, and this might take some time, as the compliance assessments are also mandated to be verified by independent third parties,” said Latin.
In contrast, five companies have claimed that their revenue or expenditure is aligned to the taxonomy’s nuclear energy criteria.
These include listed companies Vinci, Spie and Fortum Oyj, as well as France’s EDF and Sweden’s Vattenfall.
Although the numbers are small, the three listed companies represent just under one-quarter of Europe’s public nuclear market. There are currently 14 listed companies with exposure to nuclear energy across the European equity universe, according to MSCI Europe Investable Market Indexes.
Vinci, Spie and Fortum Oyj are constituents of 1,707 Article 8 funds and 102 Article 9 funds.
“The taxonomy criteria for both gas and nuclear have been designed to benefit only few EU member states and the numbers prove it,” said Tsvetelina Kuzmanova, senior policy adviser at think tank E3G.
“The lower taxonomy alignment for gas is possibly due to the coal-to-gas switch requirement in the taxonomy, which, due to the higher gas prices and its geopolitical charge, is not the most preferable political decision for coal-dependent states, especially in Central and Eastern Europe.”
She added: “While it is good to see that for now there is not much new taxonomy-compliant gas in Europe, it is clear that the criteria for both gas and nuclear were designed to divert clean capital to only a few.”