Dissatisfaction with natural gas and nuclear power as a sustainable investment
We have previously written about the taxonomy regulation in general and its extension to gas and nuclear activities. These blogs have discussed the requirements that European legislation imposes on SRI. The European Commission is now proposing a “list of green investments”. However, the extension of the list to include gas and nuclear activities has become controversial. Financial institutions, environmentalists and politicians are critical.
In the Netherlands, the Volksbank, Triodos, ASR, Actiam and Achmea state that they are satisfied with the drawing up of a list of sustainable investments, but are critical of the content of the list. It is inexplicable that natural gas and nuclear energy should also be on the list, because they do not contribute to the reduction of CO2 emissions and it is not in line with the European Union’s climate act. In addition, the institutions state that natural gas and nuclear power are also not in line with the principle of ‘do no significant harm’. This principle means that an activity must not have a significant negative impact on environmental objectives as laid down in Article 3 of the Taxation Ordinance.
There is also criticism outside Europe. From Australia, government employees and environmental activists are saying that nuclear energy and natural gas should not be included in the list, even temporarily. Like the financial institutions in the Netherlands, they also indicate that this temporary nature leads to legal uncertainty. For example, little is clear about how long nuclear energy and natural gas will remain on the list. After all, the rationale behind adding these energy sources is vague, namely “contributing to the energy transition towards a predominantly energy-renewable future”. Another argument put forward is that it would make it easier for investors to become laxer in their sustainability decisions. The “it is in the Taxonomy, therefore it is allowed” does not contribute to making conscious sustainable choices. Currently, if an investor wants to invest in nuclear power and natural gas projects, they must be able to demonstrate that it is sustainable. It could therefore lead to a more flexible view on sustainability and that would be exactly the wrong thing to do.
The above does not mean that there are not also positive voices. Some EU countries are positive about the addition to the list. Germany, for instance, argues that natural gas is necessary as a temporary energy source until enough renewable energy sources are available. France, where investments are being made in new nuclear energy reactors, also considers the addition positive. The European Commission has not yet responded to the criticism.
Do you have any questions about sustainable investing? Then please contact Law & More. Our lawyers on sustainability law will be happy to advise you and answer your questions.
Source: NOS, ‘Natural gas and nuclear power not a sustainable investment, say banks and insurers’, 11 February 2022
Source: CNBC, ‘EU’s plan to include gas and nuclear in ‘green’ ranking leaves investors confused’, 6 January 2022
Source: Marina Strauss, ‘European Commission declares nuclear gas to be green’, 02-02-2022