Yesterday policy-makers in the European Parliament agreed on laws to define green investments, called the Taxonomy regulation. The laws should help European investors put their money into green companies. However, the current draft doesn’t highlight activities that could also cause harm to people and communities.

In particular, there is no mention in the report that environmentally sustainable activities must be checked against the significant human rights violations they could cause.

It also includes coal and carbon-intensive industries in the range of sectors which could be classified as sustainable. In addition, the possibility for the development of a so-called “social taxonomy” has been greatly diminished, as has the requirement for environmentally sustainable activities to “cause no harm” to other environmental activities under the same legislation.

In response, Eleni Choidas, European Policy Manager at ShareAction, said: “Sustainable finance ceases to be sustainable if it helps our environment but harms those who live in it. The final position of MEPs was significantly lower than many of the ambitious amendments previously negotiated by the report’s two rapporteurs. ShareAction has been advocating for human rights to be written into this legislation - even before its release. We would strongly urge MEPs to reconsider this point, as a minimum, in the upcoming plenary, and are hopeful to see further amendments tabled on the day to re-instate some of the hard-won ambition previously achieved by the co-rapporteurs. 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. Such a provision is crucial in ensuring a domino effect which can raise standards for corporate accountability across Europe.

A tentative win, nonetheless, is the expansion of the membership of the Permanent Platform which will oversee the development of the taxonomy – which now seems to include the European Fundamental Rights Agency, as well as wider civil society representatives.

Notes to editors:

• For more information, please contact Beau O’Sullivan at beau.osullivan@shareaction.org
• Since its release in May last year, the Taxonomy has garnered significant attention, famously being dubbed as the “trunk” of the Sustainable Finance Action Plan – a key piece of legislation on which all others would depend.
• Biofuel projects, a climate mitigation activity, have been linked to adverse impacts on communities through negative effects on food security, gender equality and women’s rights.
• The legislative proposal for the taxonomy accompanies the technical work undertaken by the Technical Expert Group, which is nonetheless not involved in the political part of the process. Following yesterday’s vote at Committee level, the report will be submitted to the plenary in Strasbourg in mid-April. Further amendments can be submitted on the day, and the final vote then will determine whether the file will progress to the final stage before adoption – trilogue negotiations.