The EU Commission’s green taxonomy is a riot. Because the Brussels authority also recognizes investments in nuclear and gas power plants as sustainable under certain circumstances. Shares in the operating companies can then be found in eco-funds. The regulation is not yet in force, when the dispute about an extension begins: the social taxonomy. The Commission now wants to address the question of which economic activities are social, i.e. increase the well-being of people and communities. At the same time, the authority could define which sectors should under no circumstances be considered socially responsible.
The defense industry already fears that Brussels wants to stick this deterrent logo on it – and that it could become more difficult to attract bank and investor money. the Süddeutsche Zeitung the draft of an 83-page expert report for the Commission is available. And he actually proposes classifying tobacco products and certain weapons as “under all circumstances contrary to social goals”. However, the wording is more cautious compared to an interim report from July.
The taxonomies are classification systemsthat define what is ecologically and socially sustainable. This is intended to prevent companies or funds from presenting themselves as greener or more social than they really are. With this, the Commission wants confidence in ecological or social financial products – for example social bonds or eco-stock funds – and attract more investor money. The green taxonomy is already in force, except for the regulations on nuclear and gas power plants.
The social taxonomy, on the other hand, is still in the draft phase. The Commission tasked a panel of experts, the so-called Platform for Sustainable Finance, with developing recommendations for such a social classification system. In July, the experts published one interim report. He aroused great fears in the armaments industry because he declared weapons, along with gambling and tobacco products, to be socially harmful. The German armaments lobby BDSV warns that this social taxonomy could cause massive financing problems for manufacturers: banks and insurers have sometimes shied away from offering their services to armaments companies out of concern for their reputation. A negative classification in the EU social taxonomy would increase these difficulties, the association argues.
The armaments industry considers itself sustainable
Accordingly, BDSV boss Hans Christoph Atzpodien criticizes politics sharply: “After our previous talks in Brussels and Berlin, I sometimes have the impression that they don’t know what they are doing there. In many cases, there is no awareness of the problem at all,” he said recently in an interview. The industry would promote peace and security and thus make “a fundamental contribution to sustainability”.
The expert group of the Commission should actually present its final report at the end of 2021, now it should be ready by March. The draft report now states that the taxonomy should assess how companies contribute to three goals: good working conditions for their employees and those of suppliers, the well-being of customers and product users, and an inclusive society. In addition, certain goods should be defined as socially harmful – the manufacturers could then by no means be considered socially sustainable, even if they treat their workers like kings and are the main sponsor of the local wheelchair tennis club.
The draft report cites weapons as an example of such products, although in contrast to the interim report from July, it lists in detail which types of weapons are critical, such as anti-personnel mines or cluster bombs. The consultants of the Commission do not want to declare all armaments companies to be socially unsustainable companies. German manufacturers should be spared this blemish because they don’t sell the banned weapons.
Nuclear reactors in ecological funds and social bonds for arms factories
But this is not enough for the armaments lobby BDSV: Atzpodien, head of the association, demands that the commission should not only classify his industry as neutral, but also as socially positive and sustainable per se. Then fund and bank managers would shed their skepticism about the gunsmiths and willingly make money available again, so it is hoped.
However, many investors would probably find the prospect of social bonds to finance weapons production strange – just as strange as the prospect of eco-funds being allowed to hold shares in nuclear companies by 2023. The green taxonomy is controversial because of its inclusion of nuclear power plants; in the social taxonomy, the role of the defense industry will provoke heated debates.
The CSU MEP Markus Ferber therefore calls on the Commission to bury the social taxonomy. “If you look at the current drama surrounding the green taxonomy,” the authority “would be well advised not to open the next barrel straight away,” says the economic policy spokesman for the Christian Democratic EPP group. There were even “objective scientific criteria” in the green taxonomy, but the dispute over nuclear power plants shows that “we still cannot agree on a common understanding of sustainability,” says Ferber. A consensus on the social taxonomy will be even more difficult to find because “everyone unpacks their subjective ideas about social justice”.