EU green taxonomy vote branded ‘disastrous’ as MEPs quash key amendments

Parliamentary setback for key part of EU Action Plan on Sustainable Finance

A vote on the ‘green taxonomy’ last night at the European Parliament has been branded “a circus”, with an unexpected outcome which some say “favours financial lobbyists and greenwashing”.

In an uncharacteristically lively session hosted by the Parliament’s Environmental (ENVI) and Economic (ECON) committees, tensions flared as a slew of progressive amendments that would have raised the ambitions of the taxonomy were rejected by tiny majorities.

The key amendments that had been put forward by rapporteurs Bas Eickhout and Sirpa Pietikäinen included the expansion of the taxonomy to cover social issues, the inclusion of a ‘brown’ taxonomy, and the integration of human rights into the methodology.

The amendments have faced major headwinds for a number of weeks now, but even so, the result was an unexpected blow for progressive parties and civil society.

Normally, in advance of a Parliamentary Committee vote (which seeks to crystalise the position of the European Parliament before it enters into negotiations with the Council via “trilogues”), the rapporteurs will develop a single Compromise Amendment document, outlining changes they want to make to the original legislative proposal from the European Commission. The Committee (or joint committee, in this instance) then votes on that document and – if there is not a clear mandate – it will then be put to the full parliament at a Plenary session.

On the topic of the taxonomy, however, things have become more complicated. Last month, RI understands the co-rapporteurs faced “a revolt” by the right-of-centre European People’s Party (to whom Pietikäinen belongs) when members decided they would not back the Compromised Amendments that had been established. Instead of renegotiating, they created a parallel set of Compromise Amendments, which were far more conservative than those put forward by the Rapporteurs.

As a result, both sets of proposals were voted on last night, making for what one insider described as “one of the most animated votes I’ve ever seen”.

RI was told by people close to the matter that the centre/liberal group at the Parliament (known as ALDE) had pledged to vote in favour of the progressive proposals, but when it came down to it, voted disparately.

Sebastien Godinot, an Economist at WWF’s European Policy Office told RI: “The lobby work from conservative trade associations was the reason for having half of ALDE MEPs not following the line of their own negotiators.”That, along with the fact that some left-leaning MEPs could not attend, gave the win to the more conservative proposals.

“Everyone expected the progressive compromises to be passed by a slim majority,” said one observer, “but the conservatives were winning votes from the very first amendment and the left quickly realised they didn’t have the numbers they thought they did in the room.”

All the amendment votes were close, with some being rejected because votes were equal (the EU process is based on a straight-majority approach to voting).

The final report that was approved looks very close to the Commission’s original proposal. Plans to commit the Commission to develop social and governance objectives were rejected, in favour of the original, looser commitments; plans for a ‘brown’ taxonomy for investments “that fund one or several economic activities that cause significant harm to the environment” were also dismissed, along with proposals for a label for financial products and corporate bonds that are found to be aligned with such criteria.

The integration of human rights also failed to make the cut, in a move that was slammed by ShareAction. The NGO’s European Policy Manager, Eleni Choidas, said she urged MEPs to reconsider this point, adding that “minimum social safeguards need to be considered at EU-level to ensure companies are encouraged to mitigate the human rights risks of their operations, and that investors apply the right kind of pressure to ensure this be the case if they want the activities they invest in to be classified as sustainable by the EU”.

Notably, the MEPs did not accept an amendment that would have prevented fossil fuels from being included in the green taxonomy.

The Progressive Alliance of Socialists and Democrats released critical statements on the result today, with ECON rapporteur Pervenche Berès echoing concerns that the taxonomy proposals had seen “a lot of lobbying from the industry that has been listened to by the conservatives”.

It is still possible to change the final agreement by Parliament, but it is much trickier. To table amendments at plenary stage, the rapporteurs would need to get backing from 75 MEPs. Then they would need to win the vote, which would be cast by all of Parliament, the lion’s share of whom will not be familiar with the taxonomy.