EU auditors demand it does more for green investment

The EU’s own finances are failing to street the bloc away from emissions, and not doing enough in encouraging private funds to go green.

The report, from the European Court of Auditors (ECA) is critical of the of the ‘green taxonomy’ and if fully enacted (the taxonomy has been criticised by several parties for its inconsistent definitions of clean energy production) the Commission's position fails to discourage polluting investments allowing them to be profitable.

In part the issue is due to the varied energy positions of the different member states, with some close needing gas and others close to green. In order to encompass all, the taxonomy has been stretched to the point where it fails to provide incentives to change.

As the transition to a net-zero emission economy will require significant private and public investment, the ECA is asking for more consistent EU action. Noting that the Commission has focused on increasing transparency in the market, it implies that there has been “no accompanying measures to address the cost of unsustainable economic activities and many actions have been delayed”.

In addition, the ECA believes that the Commission needs to apply consistent criteria to determine the sustainability of EU budget investments and better target efforts to generate sustainable investment opportunities.

“The EU’s actions on sustainable finance will not be fully effective unless additional measures are taken to price in the environmental and social costs of unsustainable activities,” said Eva Lindström, the Member of the European Court of Auditors responsible for the report. “Unsustainable business is still too profitable. The Commission has done a lot to make this unsustainability transparent, but this underlying problem still needs to be addressed”.
The Commission’s 2018 Sustainable Finance Action Plan addressed these issues only partially, the auditors say; many measures suffered delays and require further steps to become operational. The ECA recommends additional measures to ensure that the pricing of greenhouse gas emissions better reflects their environmental cost.

The report also highlights the important role the European Investment Bank (EIB) plays in sustainable finance. As regards EU financial support managed by the EIB, the auditors found that support provided by the European Fund for Strategic Investments (EFSI) did not focus on where sustainable investment is most needed, in particular in central and eastern Europe. In addition, only a very small part was spent on adaptation to climate change. Finally, the auditors also found that the EU budget has not fully followed sustainable finance good practice and lacks consistent science-based criteria to avoid significant harm to the environment.

    Share Story:

Recent Stories