The European Commission is expected to publish an update of its sustainable finance taxonomy on Tuesday (13 June), setting the stage for a showdown with green activists over biodiversity offsetting projects meant to compensate for the environmental damage caused by human activity.<\/p>\n
Following a\u00a0public consultation\u00a0in April, the EU executive is expected to propose new technical screening criteria for the taxonomy\u2019s four remaining objectives \u2013 water, circular economy, pollution prevention, and biodiversity.<\/p>\n
The EU\u2019s\u00a0sustainable finance taxonomy\u00a0classifies economic activities along a set of six green objectives, with the principle that they should make a \u201csubstantial contribution\u201d to at least one and harms none of them.<\/p>\n
A first set of criteria related to energy and climate change mitigation<\/a> technologies led to a high-profile clash with France and Germany over the inclusion of nuclear energy and gas, with Brussels ultimately\u00a0agreeing to include both as \u201ctransitional activities\u201d\u00a0provided they meet strict criteria.<\/p>\n Climate think-tank E3G praised the Commission\u2019s proposed criteria on disaster risk reduction, saying \u201cnature-based solutions<\/a> for flood and drought risk prevention\u201d as well as new adaptation criteria for global heating \u201care expected to be particularly good\u201d.<\/p>\n However, it also highlighted missing criteria in sectors like agriculture, fishing, chemicals and textiles as reasons for concern, saying those are \u201chigh-impact and high-risk activities\u201d that should follow more ambitious criteria than just business-as-usual, E3G said.<\/p>\n Meanwhile, circular economy criteria for sectors like buildings or plastic manufacturing are seen as too weak to \u201cbe considered as contributing significantly to the climate<\/a> and environmental objectives\u201d of the European Union, E3G added.<\/p>\n Biodiversity offsets Biodiversity offsets are nature conservation actions designed to compensate for the unavoidable impact on biodiversity caused by projects,\u00a0according to the International Union for Conservation of Nature (IUCN). Typical projects involve protecting threatened forests or restoring<\/a> wetlands, to achieve No Net Loss (NNL) and preferably a Net Gain (NG) of biodiversity, IUCN says.<\/p>\n \u201cBy definition, offsetting is a zero-sum game, so it can\u2019t represent a substantial contribution required to enter the taxonomy,\u201d says S\u00e9bastien Godinot, an economist at the WWF\u2019s European Policy Office<\/a> who used to sit on the Commission\u2019s taxonomy expert group.<\/p>\n Moreover, Godinot says introducing biodiversity offsetting in the taxonomy would be \u201cinconsistent\u201d when carbon offsets were not included in previous rounds.<\/p>\n \u201cThis is an essential point for us,\u201d Godinot told EURACTIV, adding: \u201cI hope that the Commission will be sensitive to our arguments\u201d.<\/p>\n The NGO\u2019s concerns are spelt out in a\u00a0document submitted by civil society groups\u00a0to the European Commission as part of the public<\/a> consultation process.<\/p>\n Offsetting, by definition, only compensates for environmental damage made<\/a> elsewhere \u201cand thus cannot represent a substantial contribution\u201d to the EU\u2019s environmental objectives, the NGOs argue in the document.<\/p>\n Consequently, \u201cthe Commission should exclude biodiversity offsets\u201d from the EU\u2019s green finance taxonomy, they argue, saying the proposed biodiversity offset rules are \u201cnot science-based\u201d.<\/p>\n Two years ago,\u00a0NGOs suspended their participation in a European Commission<\/a> expert consultation group on sustainable finance\u00a0in protest against what they saw as weak and \u201cunscientific\u201d criteria for bioenergy and forestry in the EU\u2019s green finance taxonomy.<\/p>\n
\n<\/strong>But the biggest worry for environmentalists is the inclusion of offsetting schemes in the economic activities related to biodiversity protection and nature restoration.<\/p>\n