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On August 27, a coalition of climate activist organizations filed a lawsuit against the European Union over “green” labels for the aviation and shipping industries. The suit claims the EU Commission qualified those industries as green investments, despite little or no reduction in greenhouse gas emissions. The case was filed before the European Court of Justice in an attempt to force the Commission to review the standards.
As part of the European Green Deal, the EU has implemented investment and reporting standards relating to the reduction of GHG emissions and broader environmental and climate friendly actions. This green transformation is being implemented through various laws at the EU level, that are then adopted by the member states.
The Corporate Sustainability Reporting Directive created a requirement that businesses report GHG emissions and other environmental, social, and governance activities. The CSRD not only provides information to consumers, banks, and regulators, but also provides a tool for investors looking to make green investments.
Connected to the CSRD, is the EU taxonomy for sustainable activities. The EU Taxonomy is designed to create uniform and clear standards for what is classified as “sustainable.” The standards are industry specific to take into consideration the needs and requirements of the various sectors. The intent is to allow businesses to have clear direction on green claims, and allow investors to make informed decisions when wanting to
The EU Taxonomy Regulation went into force in July 2020. Work then began on drafting industry specific definitions. That work was delegated by the Commission to experts, who follow a public process to draft and refine the definitions. The final language is then brought back to the Commission for adoption. A similar process is being used in the CSRD, where the drafting has been delegated to the European Financial Reporting Advisory Group.
At the end of 2023, the Commission “established additional technical screening criteria for determining the conditions under which certain economic activities qualify as contributing substantially to climate change mitigation or climate change adaptation and for determining whether those activities cause no significant harm to any of the other environmental objectives.”
The screening criteria addressed the aviation and shipping industries. According to Opportunity Green, “The aviation criteria are so weak that 100% of Ryanair, easyJet and Wizz Air’s order books, and 90% of Airbus’ upcoming deliveries, could be labelled ‘green’, according to analysis by Transport & Environment.”
Five climate related NGOs filed an appeal for review with the EU Commission in January. On June 17, the Commission rejected the appeal, finding “that the Amended Climate Delegated Act complies with the applicable EU legislation.”
The next step is to bring the matter before the ECJ. On August 27, CLAW, Dryade, Fossielvrij NL, Opportunity Green, and Protect our Winters Austria filed the suit.
In a press release, the NGOs stated, “The NGOs argue that these criteria are contrary to the requirements of the Taxonomy Regulation, as they are not based on conclusive science, do not support a 1.5°C pathway, and will hamper the development of low-carbon alternatives in these sectors…
“The EU Taxonomy should act as the ‘gold standard’ for informing ethical and sustainable investments. It exists to provide a verified list of ‘green’ investments to companies, investors and policymakers, with a view to directing huge amounts of private finance to activities that deliver a fair, green transition…
“As it stands, under the shipping criteria, enormous cruise ships which run on LNG would be deemed ‘green’. However, these ships not only produce CO2 but leak huge amounts of methane into our atmosphere, a greenhouse gas which is 80 times more potent than CO2 in the short term.”
The Court filings have not yet been made public, so the specific arguments are unclear as is the timeline for the ECJ to address this matter. However, it is unlikely the Court will address the manner anytime soon.