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Chemicals are out of the EU taxonomy. What the heck is going on?

After countless hours of work and discussions in the working group, the criteria for sustainable chemicals were put into print in the final draft for the EU’s new taxonomy.

But when the EU Commission presented the proposal, sustainable chemicals were suddenly gone. Poof — vanished into thin air! What the heck?

Published on 11 May 2023

Having sustainability criteria for chemicals in the upcoming EU taxonomy is super important. They would decide which chemicals are considered sustainable and drive substitution, giving the chemical industry the push it so desperately needs and help progressive companies increase their competitiveness. They would also spur large-scale investments into sustainable activities.

This is something the European chemical industry agrees with. Cefic director-general Marco Mensink has, for example, previously stated that “the next generation of chemicals that are safe and sustainable by design is set to be a growth engine for Europe”.

“Having sustainability criteria for chemicals in the upcoming EU taxonomy is super important”

The criteria to achieve all of this were in the final report from the expert group that the EU had put together. They had been carved out during years of hard work. The criteria were in there until they weren’t any longer. When the EU Commission presented its proposal in the beginning of May, the criteria for chemical production had been left out.

But let’s start with the basics.

What is the EU taxonomy and why do we need it?
The EU taxonomy is intended to be a common classification system for environmentally sustainable economic activities in the European Union. It could play an important role in helping the EU scale up sustainable investments since it provides companies, investors and policymakers with clear definitions of which economic activities should be considered environmentally sustainable.

“It could play an important role in scaling up sustainable investments”

This way, companies can choose to align themselves with the taxonomy to attract investments and loans while investors and creditors get a useful tool to help them identify sustainable activities.

And when it comes to chemicals, this is something investors really want. A month and a half ago, twenty of the world’s largest institutional investors wrote an open letter, urging the EU Commission to protect the ambitious chemical criteriathat had been developed for the taxonomy. Unfortunately, the criteria for chemical production have now mysteriously disappeared from the Commission’s proposal.

Nothing pushing the chemical industry to become more sustainable
With regards to chemicals, almost all that’s left in the taxonomy is a reference to Appendix C, which states that taxonomy-aligned activities and products cannot contain chemicals fulfilling the criteria for Substances of Very High Concern (SVHCs).

Now, just to be clear. What this appendix says is really important and needs to be kept as it is. But chemical production also needs to be included, just like it was in the recommendations from the working group. If it’s not included, there’s no way for investors to separate good from bad.

Right now, there isn’t sufficient motivation for European chemical industry to produce more sustainable chemicals. European chemical industry needs a clear incentive to drive substitution forward (something the chemical industry itself has been asking for).

“European chemical industry needs a clear incentive to drive substitution forward”

If chemical production isn’t included in the taxonomy, then there’s nothing to push investments towards sustainability. Especially not from a chemical pollution perspective.

Millions of euros will instead — unknowingly — be channelled into the production, use and release of more toxic chemicals. That doesn’t sound very sustainable, does it?

PS. It’s impossible to end this text without mentioning the transport sector debacle. According to the EU taxonomy, investments in more “efficient” planes and ships should now be considered sustainable, regardless of whether they still run on fossil fuels. Huge investments could, in other words, go to towards some of Europe’s biggest polluters. What’s up with that?