Implementing the European Green Deal via the EU Taxonomy Regulation

Researchers in the project want to ascertain whether major EU initiatives to ensure an economic recovery following the ongoing global pandemic are also sustainable in line with the European Green Deal and international law.

The overall aim of the project is to determine how criteria for EU sustainability screening should be designed to conform to international environmental law and human rights, so that economic activities identified as “sustainable” really do contribute to the implementation of the European Green Deal objectives.

Those objectives include achieving climate neutrality by 2050. This means that under the new Taxonomy Regulation all investments by the EU must undergo mandatory sustainability screening. This is intended to ensure that investments “do no significant harm”, and that they meet “minimum social and governance safeguards”. 

The new sustainability regime will have a major impact on the way in which EU investments are made. The full content and applicability of the screening criteria, however, have not yet been established. This has caused a great deal of uncertainty and disagreement among EU member states over how to define sustainable investments, and hence how the screening will impact different sectors. For example, there is much concern in the Swedish forestry sector that investments in the sector will not be supported by the EU Taxonomy regime in the longer term.

The current pandemic-related economic crisis is fueling concern over the possibility of some companies being excluded from forthcoming EU funding if their operations are not considered to be sustainable under the Taxonomy regime. But in light of the climate crisis, it is vital that the EU abides by its Green Deal commitments, and does not bow to political pressure. Amid increasing litigation against states around the world for climate inaction, it is therefore essential that the EU screening criteria are compatible with existing standards enshrined in international environmental law and international human rights law.

If the screening criteria do not comply with the obligations and standards laid down in the Paris Agreement, the UN Guiding Principles on Business and Human Rights and the Sustainable Development Goals, ongoing investments may have to be suspended owing to potential legal disputes. Delays of this kind would hinder the EU’s urgent action plans to combat climate change and secure an economic recovery.

The EU Taxonomy Regulation will set the benchmark for identifying sustainable economic activities throughout the EU, and it is vital that the regime be consistent with international law in order to achieve EU climate objectives by 2030 and climate neutrality by 2050. A stronger basis in international law may also create an objective standard that prevents the national agendas of member states from watering down EU proposals for more stringent sustainability screening.

The researchers in the project will be studying and addressing legal issues of an environmental, social and economic nature.

Implementing the European Green Deal through the EU Taxonomy Regulation

Principal investigator:
Britta Sjöstedt

Daria Davitti

Lund University

SEK 6.1 million