The proposal for the final four environmental topics of the EU Taxonomy – part of the green transition and aimed at channelling funds into sustainable endeavours – contains promising statements about chemicals. The proposal states that producing and using harmful substances can never be regarded as sustainable, and that substituting them should be considered “deep green”.
Now, the proposal is about to be turned into a regulatory framework by the European Commission. To ensure that the Taxonomy actually helps investors identify truly sustainable economic activities – leaving no room for companies to lead them astray through greenwashing – it’s important that the framework maintains the ambition of the original proposal.
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Harmful chemicals pose huge financial risks
To prevent this from happening, 20 of the world’s largest investors – who are all members of the Investor Initiative on Hazardous Chemicals (IIHC), coordinated by environmental NGO ChemSec – have written an open letter to Commissioners McGuinness, Breton, and Sinkevičius. In the letter, investors such as Nordea Asset Management, Aviva Investors, AP1-4, and Robeco call for the Taxonomy criteria to be truly sustainable, in order to encourage sustainable innovation and the development of safer chemicals.
Eugenie Mathieu, Earth Lead at Aviva Investors, explains why this issue is so important:
“An ambitious and progressive Taxonomy is a crucial tool for investors. It allows us to see which efforts are truly sustainable and which are not, making it easier to assess financial risks and opportunities accurately. This, in turn, means more funding channeled towards the green transition, a matter that concerns everyone – not only investors.”
The signing investors point out that the production and use of harmful chemicals, in addition to posing a major threat to human health and the environment, are linked to major financial risks for investors and manufacturing companies alike. These risks include costs and damages related to regulation, reputation, insurance, and litigation, as the many PFAS scandals now surfacing around the world clearly demonstrate.
Bottom line: Keep the Taxonomy criteria progressive
In essence, the investors urge the Commission to keep the Do No Significant Harm principle – not hampering any environmental criteria while contributing to another – on pollution prevention in the climate delegated act. More specifically, they want the Commission to state that regulated substances, as well as substances that meet the criteria for being Substances of Very High Concern (SVHCs), cannot be considered sustainable. The investors also urge the Commission to support the proposal from the Platform on Sustainable Finance for the final four Taxonomy topics concerning chemicals.
The signing investors believe that the green transition is not only in the interest of EU citizens and investors, but would also greatly improve the long-term profitability of the European chemical industry.
ChemSec’s Senior Business and Investors Advisor Sonja Haider is very pleased that so many investors have chosen to raise their voice, and that the chemicals issue has become high priority for investors overall:
“The green transition needs a lot of investment, and it’s only possible to attract green funds through clear and truly sustainable Taxonomy criteria. The fact that investors are now also considering chemicals and have adopted a holistic approach to tackle the triple planetary crisis of climate change, pollution and loss of biodiversity is a very good thing”, she says.
