Taxonomy: a step in the right direction, but only a step
Under the broad umbrella of the Green Deal, we are seeing the preparation of a raft of laws and delegated acts, all giving rise to consultations that have to be responded to. The agendas of EU trade associations today are full to the brim, and certain files considered less important are passing under the radar. As a result, many seem to regard Taxonomy as a secondary issue, one for the very long term. Recent developments demonstrate, however, the present nature of the file and the concern it arouses. Evidence for this was provided by the webinar that we, as CEFS, organised on 24th February 2021. More than 200 people signed up for it, no doubt interested by the presence of Mrs McGuinness, the Commissioner in charge of Taxonomy.
A willingness from the Commission to listen, and an acknowledgement of technological innovation
Recently appointed as Commissioner for Financial Services, Mrs McGuinness has taken over the post from the now Executive Vice President Mr Dombrovskis. This association might suggest the Commission will be reluctant to alter its general strategic direction. The new Commissioner began the webinar by reminding us that the EU executive’s aim is to adopt the delegated act by mid-April at the latest. But she also expressed her willingness to listen and pursue dialogue. We will certainly be able to judge the importance of this when the proposals of the Platform on Sustainable Finance, expected on 15th March, are published.
Beyond her commitments on the methodology, Mrs McGuinness hinted at some new pieces of information that go in the right direction. She stated that Taxonomy has to be future-oriented. She also clarified that research and development factors will be taken into account. This seems to indicate a willingness to adapt the mechanisms, thereby avoiding an overly rigid system. This pragmatic approach extends to the agricultural sector, for whom she underlined two key points: first, Taxonomy is intended to apply to very large farms; second, flexibility will be incorporated to take account of climatic variations and national practices.
Another important point is that Mrs McGuinness recognises the need to launch in-depth discussions with the EU’s major international partners regarding sustainable finance. This refers to the United Nations Sustainable Development Cooperation and the International Platform on Sustainable Finance. Although the Commissioner did not say so, these talks must be expanded to include the United Kingdom so as to avoid creating a competitive imbalance at the expense of EU businesses.
Rapidly present concrete proposals for amendments to the Commission
In her conclusion, Mrs McGuinness called the Taxonomy file “a journey, and a difficult one.” That is certainly true. Looking ahead to the coming year, three procedural stages can be envisaged:
- The first runs from now until the adoption of the delegated act, possibly a period of 6 weeks during which we cannot remain inactive. In my own speech preceding the Commissioner’s conclusion, I proposed that a significant number of actors belonging to different industries (agriculture, agri-food, biofuels, energy, mines, metal, capital goods, etc.) should unite to draw up suggested amendments to the draft delegated act. Mobilisation is vital.
- The second stage relates to the possibility of the Council of Ministers or European Parliament exercising its veto right. The opposition of 10 Member States to the current proposal seems a long way from the required qualified majority, and there may well be severe fragmentation within the Council unless the Commission adapts its text as Mrs McGuinness has indicated.
- The third stage comes after the delegated act is adopted. The basic legislation provides for a period of one year between the adoption of the delegated act and its entry into force, so as to allow operators time to adapt. Since 1st January 2022 has been set as the date of entry into force, it is already clear that the 12-month period will not be respected, which should open up other possibilities for action.
Thus we see that the Taxonomy file will be “a long journey”. Only a willingness for dialogue on the part of the Commission will allow us to make it shorter.
Director General - European Association of Sugar Manufacturers (CEFS)