A group of campaign organisations is pressing for human rights and other issues like governance and taxation to have a more prominent role in the European Union’s push towards sustainable finance — which has initially focused on the development of a green ‘taxonomy’.
The campaigners have written to European Commission Vice-President Valdis Dombrovskis, calling for human rights experts to advise a newly set up Technical Expert Group on sustainable finance. They want them to have permanent observer status to the technical group.
The Technical Expert Group was set up last month to build on the work of the earlier High Level Expert Group (HLEG) and it includes 35 representatives from Europe’s banks, index providers, insurers, stock exchanges, data houses and civil society. It’s tasked with developing EU standards on sustainable finance, green bonds, low-carbon benchmarks and climate disclosure metrics.
Bethan Livesey, Head of Policy at ShareAction, which coordinated the letter, said Europe “could slip up if it doesn’t address the S and E of ESG”.
The campaigners fear the Commission’s commitment to a ‘do-no-harm’ approach on human rights does not go far enough and say it is crucial that the mooted taxonomy helps protect human rights. “Capital flows,” they say, “should not be incentivised towards activities that may be environmentally sound, but otherwise unsustainable.”They complain about a lack of “granularity” in the Commission’s plans.
They call for minimum safeguards informed by the EU Charter of Fundamental Rights, the International Bill of Rights and the UN Guiding Principles on Business and Human Rights.
Moreover, they see governance safeguards as “wholly lacking” from the Technical Expert Group, arguing that good governance on issues like “taxation practices, corruption, and board structure” are key to all sustainable investments.
“Europe “could slip up if it doesn’t address the S and E of ESG”
They want the EU to broaden its ambitions beyond an environmental taxonomy towards a “social taxonomy”.
The letter concludes: “It is not our wish that this work be further complicated, but firmly believe that for the taxonomy to serve its intended purpose the Commission needs to adopt a more holistic and comprehensive approach to its development.”
But it’s the latest hurdle facing the Commission’s sustainability plans, after a barrage of opposition met its proposal re-draft the MiFID rules governing investment intermediaries so that investment advisors to incorporate ESG when they advise clients.