In October 2021, investors and financial advisers, who collectively represent over $3.5 trillion in assets, sent a letter to the EU Commission, summing up concerns over certain elements of the EU Taxonomy, and drawing attention to the importance of the agriculture sector.
The letter points out that food production is responsible for a quarter of all greenhouse gas (GHG) emissions, with intensively reared livestock having extensive adverse impacts on emissions, biodiversity, and water use, as well as antimicrobial resistance.
Investors welcomed the steps the EU has taken over the past years on bringing sustainable finance to the forefront of the EU’s legislative agenda. Within that context, three general points were raised:
The upcoming Delegated Acts should follow a similar science-based framework to ensure that harmful or emissions intensive practices are not inadvertently categorised as ‘sustainable.’ This will ensure the robustness of the EU Taxonomy.
The EU Taxonomy screening criteria must limit global warming to 1.5°C and be aligned with the Paris Agreement.
We want to reiterate that the EU Taxonomy and upcoming delegated acts should ensure the disclosure of information on how non-financial companies’ activities align with each relevant environmental objective (e.g. water, biodiversity), in order to provide sufficiently granular information for investors.
Three points were raised on agriculture specifically:
We are concerned that industrial livestock production may be classified as ‘green’ in the Taxonomy without sufficient consideration of multiple ESG risks.
The EU Taxonomy should consider the importance of organic and agro-ecological farming methods.
The ‘Do no significant harm’ (DNSH) criteria must consider antibiotics and animal welfare
The letter concludes that it is essential that the Taxonomy’s Technical Screening Criteria are science-based, and do not undermine the objectives of global climate and biodiversity agreements
To view the full letter text with more details on each of the points, click here.