CYIL vol. 13 (2022)

CYIL 13 ȍ2022Ȏ INTEGRATING CLIMATE CHANGE ELEMENTS INTO INTERNATIONAL INVESTMENT… activities. It is part of the EU’s broader strategy to meet its sustainability objectives and is closely linked to the EU sustainable finance framework and certain mandatory disclosures of companies in the EU. It is expected to be applied by the Member States to EU funding and when using public finance and is hoped to bring more certainty about which economic activities contribute most to the Green Deal. The EU Taxonomy Regulation sets out detailed criteria to decide whether an economic activity is environmentally sustainable, respectively EU Taxonomy-aligned. The economic activity must make a ‘substantial’ contribution to at least one of six EU’s climate and environmental objectives, while at the same time not significantly harm any of these objectives, meet minimum social safeguards (in particular comply with the OECDGuidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, the ILO Declarations, and the Universal Declaration of Human Rights), and comply with technical screening criteria set up by the European Commission. The six environmental objectives include: climate change mitigation, climate change adaptation, the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems. Taxonomy Delegated Acts, to be adopted by the Commission, will provide practical definitions and actual lists of environmentally sustainable activities for each environmental objective. In line with the goal of achieving climate neutrality of the EU economy by 2050, the criteria are ambitious and require a ‘substantial’, not just a marginal, contribution. Consequently, the EU Taxonomy should support only ‘truly’ climate-friendly projects. The current EU Taxonomy covers more than 100 economic activities in 13 sectors and will continue to expand. The first delegated act, focused on climate objectives, sets technical screening criteria for economic activities in the sectors that are most relevant for achieving climate neutrality such as energy, manufacturing, transport, and construction. 62 The inclusion of natural gas and nuclear energy in the EU Taxonomy as sustainable fuels raised political controversies among EU Member States and experts. 63 Specific gas and nuclear energy activities will only be recognised under certain conditions as temporary activities that cannot yet be replaced by technologically and economically feasible low-carbon alternatives but support the transition to a climate-neutral economy. 64 This means that such activities are not fully sustainable but 62 Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives. 63 See e.g., European Environmental Bureau, Letter Concerning: Inclusion of nuclear energy and fossil gas as sustainable investments in the EU Taxonomy Complementary Delegated Act covering certain nuclear and gas activities. [online]. 18 January 2022. Accessible at: https://eeb.org/wp-content/uploads/2022/01/EEB Paper-Taxonomy-delegated-acts-nuclear-and-gas.pdf. Further, Platform on Sustainable Finance, Response to the Complementary Delegated Act. [online]. 21 January 2022. Accessible at: https://ec.europa.eu/info/sites/ default/files/business_economy_euro/banking_and_finance/documents/220121-sustainable-finance-platform response-taxonomy-complementary-delegated-act_en.pdf. 64 Commission Delegated Regulation (EU) 2022/1214 of 9 March 2022 amending Delegated Regulation (EU) 2021/2139 as regards economic activities in certain energy sectors and Delegated Regulation (EU) 2021/2178 as

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