Platform on Sustainable Finance – Draft report on criteria for the EU Taxonomy

The draft report is a working document by the Platform on Sustainable Finance and contains preliminary technical screening criteria that do not represent a final view of the Platform. The call for feedback is part of ongoing work by the Platform, which was set up by the Commission to provide advice on the further development of the EU taxonomy. The call for feedback represents an opportunity to gather feedback and evidence from a wider set of stakeholders, to improve the draft criteria and make them more robust and usable.


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KSLA’s general feedback

Counterproductive

The purpose of the Taxonomy is to meet the aims of the “European Green Deal” and to transform the EU into a modern, resource and carbon efficient, and competitive economy. In the proposed new EU Forest Strategy for 2030 it is stated that the European forests have an important role in our economy and society. The Taxonomy criteria are not in line with those messages. The Taxonomy presents numerous of new restrictions for the forestry sector without being able to scientifically link them to the six environmental objectives. The limited list of references shows how a large part of existing scientific knowledge has been overlooked (see our input to the previous consultation). Furthermore, the inherent and significant geographical variety in local and regional conditions for sustainable forest management systems around Europe is not enough deliberated. The proposed design of afforestation plans (AP) and forest management plans (FMP), and the proposed compliance routines would create a disproportionate bureaucracy. This will be very costly to implement and lower the motivation of forest owners. In the Nordic countries this type of plans, but without heavy bureaucracy, are already in place. The forest management plan proposed in the Taxonomy document is given a new role, to control and monitor forest owners, which will increase the risk of being contra productive. The ban against building of new forest roads, which is both economically and environmentally motivated, as well as prohibiting use of fertilizers in forestry shows that the Taxonomy criteria are not in favour of increased wood biomass production and hence an increased climate mitigation potential. It also creates a disadvantage for large forest nations, such as the Nordic countries, in comparison with the rest of EU. An example of a suggested contra productive criteria within agriculture is when livestock farmers can’t access “any natural watercourse” without guidance from competent authority. This will reduce the willingness of having grazing livestock in remote natural pasture areas which will jeopardise a continued high biodiversity in these areas.

Process failure

The suggested criteria regarding animal production, crop production, forestry logging and electricity from bioenergy are only partly based on existing scientific knowledge and omits a large volume of scientific research and publications showing contradictory results, which reveal the deficiency in the process. One example is the insufficient scientific evidence that the biodiversity in the boreal forests in the Nordic countries is at risk. This lack of coherent scientific facts has led to that the Royal Swedish Academy of Agriculture and Forestry recently has established a special Committee with a three-year mandate to investigate and compile existing facts. There is also a lack in systems perspective including not only environmental but also economic and social sustainability and a balanced evaluation between these three sustainability aspects. The process has also failed to apply a necessary value chain perspective taking into account also final products and their substitution effects, thereby covering the complete life cycle climate benefits. The suggestion that Forest sustainability should be decided by the most ambitious legislations, or by the National Legislation, Forest Europe’s Sustainability Criteria or RED, increases the uncertainties in an unacceptable way by rereferring to not-yet decided legislations. The sizeable complexity and magnitude regarding the technical screening criteria in the Taxonomy makes the delegated act procedure inappropriate also from a democratic point of view. With respect to it’s far-reaching effects on the economic prerequisites for the agriculture and forestry sector, the procedure should instead have been based on the normal legislative procedure with a trialogue negotiations with the Council and the European Parliament.

No impact assessment

The suggested criteria are presented without an appropriate impact assessment quantifying potential consequences on environmental, social and economic sustainability aspects. This is not in line with an anticipated scientific approach, and which is a prerequisite before introducing new policy tools.  For example, there are no consequence analyses presented on how the proposed criteria will affect a sustainable, economic use of the European forests, or how it will affect the objectives of a growing bioeconomy and the transition to a circular economy, neither the fact that European forestry nor forest industry are competing on a global market. An impact assessment regarding the preconditions for practical implementation of the various suggested criteria are also needed since, for example, it is unclear what is expected to be done and by whom in the forest/agriculture value chain, as well in the financial sector.