The EU Commission has initiated the next phase of the EU taxonomy: the social taxonomy.
Driven by an expert group on the EU Commission-initiated Platform on Sustainable Finance, the social taxonomy builds on three objectives: decent work, adequate living standard and wellbeing for end users, and inclusive and sustainable communities and societies.
In a report published 28 February 2022 the expert group states the investment in possibly harmful activities such as weapons should be declared as “socially harmful” based on internationally agreed conditions.
On the same day Hans Christoph Atzpodien, who runs the lobby group BDSV – the Federation of German Security and Defence Industries, urged the EU to recognise the defense industry as a positive contribution to social sustainability under the ESG taxonomy. This was echoed by Markus Ferber, a German member of the European Parliament who was cited as saying: “With the Ukrainian crisis, we are witnessing right now how important a strong European industry is. It would be precisely the wrong move to undermine the strength of the European economy by a misguided over-eagerness for sustainability.” According to Ferber, the EU Commission would be well advised not to follow through with the proposals from the Platform on Sustainable Finance.
Adding weapons to the “do not harm” list would put the EU taxonomy under even more scrutiny than the current discussion around nuclear and gas.
See also: – Investors warned using gas and nuclear is ‘greenwashing’ despite EU taxonomy guidelines
This is because the exclusion of weapons is one of widely accepted and practiced exclusion criteria within the investment industry and is even used by funds that do not claim that they are following an ESG approach at all.
