Position paper Taxonomy by Eurosif

08 March 2021

We are concerned about the current quality of the debate around the Taxonomy Regulation. Therefore there are a few key messages that we want to convey more widely (read our full Position paper):

  • The Taxonomy is only a system for identifying/classifying 'sustainable economic activities' aligning with the Paris Agreement/EU Climate Law objective of carbon neutrality by 2050.
  • It is a transparency/reporting framework and does not contain any minimum investing/lending requirements for financial institutions.
  • It will increase transparency through a harmonised nomenclature, helping to address greenwashing. And it may over the next years gradually help steer capital to more sustainable economic activities.
  • At this stage, however, we have seen no evidence to support claims that it will cut off certain companies or entire industries from access to financial markets.
  • The Taxonomy helps identify 'sustainable investments', but makes no claim about whether these investments are financially sound. And investors/asset managers will still need to generate sufficient returns to meet the financial goals of clients, pensioners, savers.
  • And the real problem is not the Taxonomy, but the fact that according to estimates by McKinsey, around 50% of the investments in Europe required to meet net-zero by 2050 are not profitable in the current policy environment of the carbon price, taxation and subsidies. Private capital cannot (yet) be leveraged for these investments as mandated by the Paris Agreement.
  • Investors and companies will not shift their capital to these investments until they are convinced they can generate economic returns. And this will happen with a higher carbon price, not with the Taxonomy.

A robust, science-based Taxonomy is vital as a transparency tool, for investors and companies to understand how their future investments can fit in a scenario of carbon neutrality by 2050. Tinkering with science here may send the wrong long-term signals to investors. And while other policies (ETS, carbon price, EU funding) may impact the competitiveness of certain industries, it is not the Taxonomy in itself that will do this.

If you have any questions, please do not hesitate to contact us at

Read our full Position paper here