The Council of the European Union looks set to continue its push back against plans for a more ambitious EU taxonomy in today’s negotiations with EU Parliament and Commission, according to a document seen by RI.
The Council, representing EU Member State governments, is currently under the presidency of Finland, who circulated a working paper to members this week ahead of today’s trilogue – the official name for the political negotiations that take place between the three main legislative pillars of the EU – on the taxonomy.
This afternoon sees the third trilogue session devoted to the taxonomy – a controversial initiative which seeks to identify business activities aligned with the climate objectives of the Paris Accord.
In its working paper, the Presidency suggests that the Council will maintain its conservative position on the taxonomy, despite repeated attempts by European Parliament to strengthen its ambition. There is no suggestion that meaningful compromises will be proposed by the Council on key points.
The negotiations centre on a number of things, including the scope of the taxonomy legislation. The taxonomy is hoped to be useful for the market in a number of non-legal ways, but there will be one element that will be legally binding: currently, financial products that brand themselves ‘green’ will have to disclose their alignment with the taxonomy.
This has received backlash from many in the market, because it introduces an additional reporting burden for green products, while everything else is left unaffected.
The European Parliament has proposed that the legislation be extended to cover other, mainstream products, but the Council working paper suggests it will stick to its guns, with a proposed “approach [that] would mean no statement for products which do not pursue any environmental or social characteristics or objectives”.
"The council's latest attempt to develop a tight grip on the taxonomy… has stoked concerns about political meddling in climate objectives."
The Council also looks set to dismiss attempts by the Parliament to include the European Supervisory Authorities (ESAs) in the supervision of taxonomy-related disclosure.
Parliament wants a bigger role for the ESAs, which include the European Banking Authority, the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA), in monitoring taxonomy disclosure, to ensure a standardised EU approach and avoid leaving assessments exclusively to individual member states – some of whom may be less strict on green issues.
The Finnish Presidency asked Council members in its working paper if it could “continue to assume that the Member States are not willing to expand the ESAs’ authority in the supervision of disclosure under the taxonomy regulation?”
It’s the latest attempt by the Council to develop a tight grip on the taxonomy, which has stoked concerns about political meddling in climate objectives. Earlier this month, nearly 30 NGOs signed an open letter urging policymakers to protect the taxonomy from such interference.
The plea was triggered partly by an attempt by the Council to have the taxonomy delivered via Implementing Acts rather than Delegated Acts.
Essentially, Implementing Acts give much more power to Council (and none to Parliament) in the development of legislation, while Delegated Acts – supported in this instance by the Commission and Parliament – leave a lot of the decision making in the hands of civil servants and technical experts, avoiding direct political influence.
Sebastien Gordinot, an economist with WWF’s European Policy Office, said they were “concerned with the Council's dynamic” when it came to the Working Paper and the consequent negotiations.
“Despite their claim to have a final compromise rapidly, they only discuss cosmetic changes to their own position and didn't start to really consider what the Parliament and Commission propose. It is time they got serious and explored credible compromises for a deal," he told RI.
The deadline for the introduction of the taxonomy has been a major source of controversy during the negotiations. The Parliament and Commission want the first stages of the taxonomy – focused on climate change – to kick in in the middle of next year. They want the rest to be introduced into law incrementally to 2022, as it is developed. The Council, on the other hand, wants the whole thing to be postponed until 2022. This is slated to be discussed in today’s negotiations.
The lack of compromise suggested in the Working Paper, and in previous trilogues, raises alarm bells about the speed with which the taxonomy will be signed off and move to the next stage. The Commission and others had hoped that a joint position would be agreed by the end of the year, but key sticking points could remain unresolved if Parliament also refuses to budge.
For more on the Taxonomy, click here.