IN THE SHADOWS Who is opposing the EU taxonomy for polluting activities EXECUTIVE SUMMARY he EU sustainable taxonomy aims at This report analyzes the answers to this identifying activities that contribute to consultation. Its key findings are: Tthe ecological transition, in accordance with European climate and environmental • Financial institutions are the larger IN THE SHADOWS objectives. It is a vital piece of the European block opposing a taxonomy for polluting Who is opposing the EU taxonomy for polluting activities transition strategy that aims at gearing activities, with 74 institutions making up financial flows toward activities that 45% of its opponents. Research: significantly contribute to the transition. • Though the financial sector is divided, Paul Schreiber influential players and their professional However, transitioning to a more sustainable federations or associations are leading system entails replacing our polluting the charge against a taxonomy for Authors and contributors: activities and investments with green polluting activities. This position is often Paul Schreiber alternatives. Yet, the Sustainable Taxonomy clearly inconsistent with financial players’ Lucie Pinson does not identify the activities that climate commitments. Eren Can Ileri “significantly impair” the transition. What • The prominent role of financial good are new solar panels and wind turbines professional federations is problematic. if we continue to operate coal power plants They appear to be used by prominent Page editing: and use more fossil fuels? members to further an anti-climate Jordan Jeandon, Graphic designer agenda, while other members tacitly To realize how critical this loophole is, we assent. Doing so, they adopt positions Publication date: just have to remind us that, from 2016 – and opposed to those of their more climate- December 2020 the Paris Agreement - to 2019, international aware members. banks have provided nearly $2.7 trillion in • Financial institutions use four main financing for fossil fuels. And fossil fuels are misleading arguments to oppose a not the only polluting activity there is. taxonomy for polluting activities, thus In partnership with: protecting high-GHG activities. The EU Commission is aware of this critical • High-emitting companies, backed by inconsistency and proposed to include a major economic federations and industry “taxonomy for economic activities that are groups, are also actively mobilized against most exposed to the transition due to their a taxonomy for polluting activities. current negative environmental impacts ”1 Building on financial players’ mobilization, to its renewed Sustainable Finance Strategy. they could significantly influence the Nonetheless, the Commission has not work done in EU institutions and block committed to anything and, much like when this necessary piece of legislation. building its Sustainable Taxonomy, it faces tremendous pressure from financial and The climate catastrophe is here. The EU must industry lobbies to give up on it. overcome anti-climate lobbying and develop a taxonomy for polluting activities. On their Even though 203 of the 648 respondents side, financial institutions truly committed to supported a taxonomy for polluting contribute to the fight against climate change activities to the consultation opened on must break free from anti-climate lobbying the EU sustainable finance strategy, 1692 and support the EU in this process. opposed it. The remaining 276 respondents did not explicitly expressed themselves on this issue3. 2 3 3 THE FINANCIAL SECTOR DIVIDED Developing criteria for significantly harmful institutions coming for the • 21 banks insurers and asset managers, emission levels will help financial sector opposed a including Allianz, Aviva, and Triodos Bank. taxonomy for “polluting” activities. • 22 financial interest groups, like “ 74 investors, companies, issuers They make for 45% of the opponents with Accountancy Europe and Finance For (see Annex I): Tomorrow. and project promoters to • 14 banks, insurers, and asset managers, • 18 financial authorities, notably the understand the necessary like Amundi, BNP Paribas, Crédit Agricole, Autorité des Marchés Financiers (AMF), Deutsche Bank, HSBC, Société Générale the European Central Bank (ECB), the speed and depth of the and State Street. European Insurance and Occupational • 38 financial interest groups, including the Pensions Authority (EIOPA) and the transition task ahead. European Banking Federation (EBF), the European Securities and Markets Authority Insurance Europe, the French Banking (ESMA). Federation (FBF), the French association • 11 financial service providers, including Excerpt from the of asset managers (AFG) and the French Deloitte, Euronext, and the London Stock EU Technical Expert Group Insurance Association (FFA). Exchange. on sustainable finance’s • 4 financial authorities with the Czech • 15 institutions or citizens6 that reported final report” National Bank, the Danish and Polish to work in the financial sector but did not Supervisory Authorities, and the Estonian disclose any other information on their Ministry of Finance. identities. • 10 financial service providers including Moody’s ESG and S&P Global. Taking a closer look at the respondents, a • 8 institutions or citizens4 that reported clear tendency emerges from this analysis: to work in the financial sector but did not 1. Private financial players and their disclose any other information on their interest and professional groups tend to identities. fight against a taxonomy for polluting activities. Fortunately, not all financial institutions are 2. European regulators, public financial trying to protect their ‘business as usual.’ 875 authorities and groups specifically built financial institutions are backing a taxonomy to work on sustainable finance tend to for polluting activities and account for 42% favor such a taxonomy. of its supporters (Annex II): Opponents to a taxonomy for polluting activities Other/Unknow 8% Other sectors 30% Financial sector 45% Energy sector 18% 4 5 Members of French financial federations opposing or supporting a taxonomy for polluting activities French financial federation Opponents Supporters Fédération Bancaire Française Crédit Agricole CIB7 ; BNP Allianz Banque (FBF) Paribas8 ; Société Générale9 Candriam France; BNP Paribas Asset Management France; Association Française de la Amundi Asset Management; Aviva Investors France; Allianz Gestion financière (AFG) HSBC Global Asset Management Global Investor France France; Société Générale; Crédit Agricole Indosuez Gestion Crédit Agricole Assurances; HSBC Fédération Française de Assurances vie; Swiss Re; Société Allianz France; Aviva Assurances; l’Assurance (FFA) Générale Assurances; BNP MAIF SEVERAL WAYS TO Paribas Cardif The double talk of financial actors is even more obvious when comparing their position on OPPOSE THE TAXONOMY the taxonomy to the climate initiatives they adhere to. Several key members of international climate coalitions or initiatives expressed opposition to a taxonomy for polluting activities. rofessional federations and groups often on the federation’s weight to do so. Some The following chart analyzes the position of the members of four major climate initiatives: hold a key place in EU consultations financial players that pledged to protect Pand a striking number of them oppose climate belong to professional or interest a taxonomy for polluting activities. In the groups that oppose the taxonomy. AXA Members of major climate initiatives opposing or finance sector, they gather large numbers France and Groupama did not participate in supporting a taxonomy for polluting activities of banks, insurers, or asset managers that the consultation but hold sit on the boards entrust them to defend their interests. When of both the AFG and FFA that opposed the Climate initiave Opponents Supporters they advocate for or against a regulation, taxonomy. public authorities assume that they accurately Aegon10 ; Amundi; BNP Paribas Allianz; Aviva Investors; Caisse represent their members. Furthermore, the position of financial Asset Management; Candriam des Dépôts; MAIF; Mirova; professional and interest groups can lead to Climate Action 100+ (CA100+)) Investors Group; HSBC Global Danske Bank; Invesco; Federated However, these groups are often dominated inconsistencies. For example, Allianz France, Asset Management11 ; Schroders; Hermes12 by a limited number of members. Several Aviva Assurances and la MAIF are in favor of Swiss Re financial players that opposed the taxonomy a taxonomy for polluting activities but the Net-zero Asset Owner Alliance Swiss Re Allianz; Aviva; Caisse des Dépôts hold an influential position in professional FFA opposes it. (NZAOA) groups that followed the same path: Philippe Allianz Global Investors14 ; Aviva Aegon; BNP Paribas Asset Brassac - from Crédit Agricole - directs Financial players that seriously want to act Investors; Barclays Bank UK Institutional Investors Group on Management; Candriam; HSBC Retirement Fund; Caisse des the French Banking Federation (FBF); on climate change cannot stay blind to their Climate Change (IIGCC) Global Asset Management13 ; Dépôts; Danske Bank; Triodos BNP Paribas Asset Management, Amundi federations and associations’ anti-climate Swiss Re Investment Management Asset Management and HSBC Global Asset lobbying. All that do not agree with these Swiss Re15 ; Société Générale; Management France are all on the board of the entities should secede. Standard Charter Bank; Allianz