R9: Sustainable Finance: Stop Red Financing

An important foundation for the sustainable finance strategy is the European Taxonomy Regulation (EU Taxonomy). This new green language was created to stop greenwashing and create clarity on what is green for the financial sector. When an economic activity substantially contributes to an environmental objective under the EU Green deal, not harming other objectives but taking into account minimaland ensuring social safeguards, compliance to the SDGs and human rights, only then can economic activity qualify as green.
All criteria are supposed to be set along the latest scientific and sectoral insights, reviewed in a three- to five-year cycle to be aligned with that sustainable, inclusive and circular economy. A new language that paves the way for the financial sector to push for green must be a dream came true.

The European Green Party wants maximum transparency both within companies, banks and investment funds and the financal, private and public sector so that everyone can see just who is helping us towards a bright green future and who is keeping us in the polluting fossil dark age.

Therefore, the EGP urges the European Commission and the Platform for Sustainable Finance to reform the current ESG classification system and its key performance indicators, such as the Green Asset Ratio, towards a stronger impact orientation, e.g. absolute CO² reduction, and to prioritise the creation of a red/unsustainable taxonomy. This should consist of all economic
activities that significantly harm our environmental objectives and/or do significant social harm to our social objectives. This includes activities like, but not limited to:

Therefore, the EGP urges the European Commission and the Platform for Sustainable Finance to prioritise the creation of a red/unsustainable taxonomy. This should consist of all economic
activities that significantly harm our environmental objectives and/or do significant social harm to our social objectives. This includes activities like, but not limited to:

• Extraction and mining of fossil fuel reserves

Furthermore, the Commission set out to present a social taxonomy, introducing a classification of economic activities that significantly contribute to social goals in the EU and represent a common code for investors, businesses and regulators as regards what is sustainable from a social perspective and what is not. However, the EU plans to introduce a social taxonomy has been put on hold until at least the end of this parliamentary term, with a lack of political will and the absence of international standards to measure the social impacts cited as the main stumbling blocks.

Furthermore, the Commission set out to present a social taxonomy, introducing a classification of economic activities that significantly contribute to social goals in the EU and represent a common code for investors, businesses and regulators as regards what is sustainable from a social perspective and what is not. However, the EU plans to introduce a social taxonomy has been put on hold until at least the end of this parliamentary term, with a lack of political will and the absence of international standards to measure the social impacts cited as the main stumbling blocks. The European Central Bank should stop indirectly subsidising environmentally and financially investments related to the red taxonomy.

Furthermore, the Commission set out to present a social taxonomy, introducing a classification of economic activities that significantly contribute to social goals in the EU and represent a common code for investors, businesses and regulators as regards what is sustainable from a social perspective and what is not. However, the EU plans to introduce a social taxonomy has been put on hold until at least the end of this parliamentary term, with a lack of political will and the absence of international standards to measure the social impacts cited as the main stumbling blocks.The ongoing economic and social consequences of the pandemic, rising energy and food prices due to the Ukraine crisis, increased levels of debt in developing countries:The multiple global crises are putting the 2030 Sustainable Development Goals in grave danger. In order to get back on track, there is need to accelerate private sector contributions towards the achievement of the SDGS: We need to raise and direct new capital to address pressing social problems such as ending poverty or hunger and ensuring good health and well-being on a global scale.

The green taxonomy already takes social aspects into account. But it does not provide clear definitions to evaluate social investments and thus steer them toward socially-responsible activities and enterprises. A social taxonomy providing a strong definition and measurement of social investment can prevent social washing and helps with the embedment of sustainability and the SDGs into decision-making practices. A social taxonomy providing a strong definition and measurement of social investment can prevent social washing and helps with the embedment of sustainability and the SDGs into decision-making practices.

We want

• to direct private resources towards socially responsible activities and companies where it can make the most difference to people and planet;

• a clear European Framework what constitutes a social investment and what economic activities can provide a substantial contribution to social goals.

However, the EU plans to introduce a social taxonomy has been put on hold until at least the end of this parliamentary term, with a lack of political will and the absence of international standards to measure the social impacts cited as the main stumbling blocks.

The EGP urges the European Commission to implement the red taxonomy and the social taxonomy in the EU sustainable finance strategy, setting clear thresholds for the financial sector to be active in activities that significantly harm our environment.