CYIL vol. 13 (2022)

MONIKA FEIGERLOVÁ CYIL 13 ȍ2022Ȏ have emissions that correspond to the best performance in the sector, do not hamper the development and deployment of low-carbon alternatives, and do not lead to a lock-in of carbon intensive assets, considering the economic lifetime of those assets. When considering gas and nuclear energy the focus seems to have shifted from identifying truly sustainable economic activities to solving practical implementation of energy transition. This poses the risk of undermining the credibility of the scientific criteria of the Taxonomy as a whole. Based on the Commission’s explanation, the EU Taxonomy is not binary, and activities that are not classified as ‘environmentally sustainable’ in the Taxonomy regime are not automatically unsustainable. 65 There may be some uncertainty about how to deal with activities that fall below the Taxonomy green criteria but are nevertheless important for the transition of the economy and may actually have the biggest impact on climate change. In this respect, the EU Commission has been assessing the possibility of extending the existing green taxonomy to include ‘transitional activities’ to enable a more effective transition to climate neutrality and a shift away from ‘significantly harmful’ activities (a so-called brown taxonomy). 66 Not only the EU, but also other countries have developed or are preparing their own (green) taxonomies for determining whether an investment or activity is in line with sustainability principles. 67 The World Bank and OECD have prepared guides for countries on developing green taxonomies. These manuals can also provide useful information and technical details on the potential criteria of a green investment for the purposes of investment treaties. 68 The EUTaxonomy that is built on objective and science-based criteria and provides metrics and thresholds appears to be the most detailed and ambitious classification system so far. The ambition of the EU Taxonomy is to become the gold standard for green finance, not just in Europe but also in international taxonomy efforts. 69 It can, thus, serve as a good starting point in the search for a common definition of green investment for the purposes of investment treaty regime. regards specific public disclosures for those economic activities. Fossil gas should only have a role as a means to facilitate the decarbonization of the EU’s economy and transition from coal to renewables. Nuclear power elicits controversy as it is a low-carbon source of energy but entails other risks related to waste treatment. 65 European Commission. FAQ: What is the EU Taxonomy and how will it work in practice? (undated). [online]. Accessible at: https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_and_finance/documents/ sustainable-finance-taxonomy-faq_en.pdf. It is worth noting that not all activities that can make a substantial contribution to environmental objectives are now part of the EU Taxonomy. The delegated acts are living documents and will be added to over time and updated as technology advances. 66 The Extended Environmental Taxonomy: Final Report on Taxonomy extension options supporting a sustainable transition [online]. Platform on Sustainable Finance, March 2022. Accessible at: https://ec.europa.eu/info/sites/ default/files/business_economy_euro/banking_and_finance/documents/220329-sustainable-finance-platform finance-report-environmental-transition-taxonomy_en.pdf. 67 For example, Great Britain, Canada, China, and Japan. See also Cambridge Research Group on Foreign Investment and the Environment, OECD Public Consultation on Investment Treaties and Climate Change - Response paper [online]. March 2022, [cit. 1 September 2022], p. 44. Accessible at: https://www.oecd.org/ investment/investment-policy/OECD-investment-treaties-climate-change-consultation-responses.pdf. 68 World Bank. Developing a National Green Taxonomy: A World Bank Guide. WB, June 2020; OECD. Developing Sustainable Finance Definitions and Taxonomies, Green Finance and Investment. OECD, 2020. 69 The Extended Environmental Taxonomy: Final Report on Taxonomy extension options supporting a sustainable transition [online]. Platform on Sustainable Finance, March 2022. Accessible at: https://ec.europa.eu/info/sites/ default/files/business_economy_euro/banking_and_finance/documents/220329-sustainable-finance-platform finance-report-environmental-transition-taxonomy_en.pdf, pp.16-17.

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