10 March 2022

A month after the European Commission approved the inclusion of fossil gas and nuclear energy into the EU taxonomy, 92 NGOs and CSOs call on financial institutions to reject this greenwashing attempt by excluding both energies from their “sustainable” or “green” funds and bonds. This open letter appears in the context of the war on Ukraine, that serves as a painful reminder that Western democracies need to eliminate their fossil fuel dependency to curb the influence of authoritarian regimes like Russia.

In an open letter, 92 NGOs and CSOs take stock of the EU Commission’s failure to deliver a “science-based” sustainable taxonomy. To prevent massive greenwashing, they ask financial institutions to publicly commit to exclude both fossil gas and nuclear energy from all their products and bonds marketed as sustainable, green, or responsible. This notably entails excluding these energies from ‘article 9’ funds, defined in the Sustainable Finance Disclosure Regulation (SFDR) as a fund that has sustainable investment or a reduction in carbon emissions as its objective. Financial institutions can take advantage of the specific reporting obligations for fossil gas and nuclear energy.

The inclusion of fossil gas and nuclear energy in the EU taxonomy drives corporations and investors to count gas and nuclear in the sustainable share of their activities and investments. They will be able to finance new gas power plants and nuclear reactors through bonds compliant with the EU Green Bond Standard, a move that several gas companies are already making according to Nomura International Plc. The EU taxonomy could also enable financial institutions and energy companies to integrate their support to both energies in their “transition” or “carbon neutrality” plans.

In the context of the war on Ukraine, new gas power plants or nuclear reactors running on Russian-supplied fuels can benefit from taxonomy-aligned or “sustainable” funding. Such a scenario is not unlikely: Russia accounted for 45% of EU gas imports in 2021, is the biggest gas exporter in the world, and produces about 35% of the world’s enriched uranium for nuclear reactors. The Taxonomy could thus enable Russia to continue using its fossil fuel exports as a geopolitical weapon.

Both fossil gas and nuclear energy are excluded from several sustainable finance standards, including the upcoming ISO taxonomy, the Canadian governments’ green bond framework or the Greenfin label. Several financial institutions opposed the inclusion of both energies in the EU taxonomy and the IIGCC – an investor group made up of more than 370 institutions with more than $50 trillion of assets under management – raised its voice against gas.