Open Letter to the EU Commission for credible Sustainable Finance Rules

Personal letter from actors in the field of Sustainable Finance (Background information/ Sign here!)

Dear Commissioner McGuinness,

Dear Vice-President Dombrovskis,

We are writing to you today as providers, investors and other professional stakeholders in the Sustainable Finance sector. In these weeks, the European Commission, in close consultation with the Member States, will decide on the precise rules (“delegated acts”) for implementing the taxonomy of sustainable finance.

We welcome the EU Commission’s aim to develop the European Union into a leading market for sustainable finance. The Sustainable Finance Strategy will support the EU in becoming the first greenhouse gas neutral continent. At the same time, it will provide an impetus for ecological innovation in our economies and support the sustainable transformation of value chains. In order to leverage this great potential for our businesses, clear rules are essential as to what counts as Sustainable Finance and can be marketed as such and what cannot.

Here, the classification system (“taxonomy”) is crucial for the future of our Sustainable Finance sector. If investments are labelled as sustainable when in fact they are not, this will jeopardise the credibility of this growing market and will have a negative impact on the attractiveness of the EU as a green business and finance hub.

We are therefore very concerned that EU member states are pushing to deviate from the science-based recommendations of the Technical Expert Group on Sustainable Finance (TEG) on key issues. Under no circumstances should conventional gas-fired power plants or related infrastructure be counted as a greenhouse gas mitigation measure or an adaptation measure. It would therefore be wrong to raise the threshold values of 100 g CO2/kWh and 262 g CO2/kWh against the recommendations made by the expert group.

Weakening the thresholds in one area also risks setting a precedent for all other critical areas of the taxonomy. Thus, investments in nuclear energy and in unsustainable forms of forestry should not be considered “sustainable” either.

The taxonomy is the backbone of the European Union’s efforts to build and expand sustainable and thus future-proof financial structures. It is completely unsuitable for symbolic politics between national interests. There is a misunderstanding that needs to be cleared up:

Sustainable Finance stands for transparency and transformation, it is not about prohibiting certain investments. Sustainable Finance alone will not prevent any country from investing in understandably highly controversial projects such as the construction of new gas-fired or nuclear power plants and their infrastructure, or in destructive forest management. But if such investments are labelled as sustainable, the credibility and growth capacity of Europe as a forerunner in sustainable finance is gone. Important initiatives such as the EU Green Bonds Standard and the EU consumer label for sustainable finance will then no longer be in demand in keymarkets and will thus not be able to establish themselves.

Therefore, we appeal to you, Commissioner McGuinness and Vice-President Dombrovskis, not to give in to the pressure of individual states and their respective special interests. It is for you alone, as the Commission, to decide which standards you will propose from mid-April. The lowest common denominator among the Member States would be the worst possible future for Sustainable Finance.

Together with many others, we want to help the European Green Deal achieve a breakthrough. This requires success stories like the fast-growing Sustainable Finance sector. Strengthen our sector with clear rules that strengthen our credibility – instead of jeopardising it.

Yours sincerely

Sven Giegold, MEP

Kristina Jeromin

Bas Eickhout, MEP

More signatories will be added regularly. We sign this declaration as individuals with a professional role in sustainable finance. The selected signatures below do not bind the respective organisation or company.