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Building a sustainable internal market on the EU Taxonomy – Analysis of promises, obligations, and effectiveness

28.3.2024, Maisteritutkielma

This thesis examines the EU Taxonomy, which entered into force in 2020, and is closely related to other EU legislative instruments, such as the European Commission’s Delegated Acts, the Sustainable Finance Disclosures Regulation, and the Corporate Sustainability Reporting Directive. The focus of the analysis is on the legal obligations imposed by the EU Taxonomy, with the above-mentioned EU legal instruments providing additional interpretative content.

The instruments of EU law are examined in this thesis using the legal dogmatics research method. Methodological pluralism, common in environmental law, is used to examine the obligations imposed by the EU Taxonomy for a forestry undertaking and an asset manager, as well as to assess the effectiveness of the EU Taxonomy from the perspectives of economic efficiency, ecological efficiency, equity, and political acceptability. Lastly, this thesis presents proposals for legislative improvements, de lege feranda.

This thesis found that the EU Taxonomy was built to harmonize the EU’s internal market and to achieve the environmental policy objectives of the EU. The EU Taxonomy was found to combine decades of scientific literature on environmental protection with numerous standards, which require undertakings covered by the EU Taxonomy’s scope to assess the sustainability of their economic activities under comprehensive technical screening criteria. This thesis identified inefficiencies in the legislative approach to the scope of the EU Taxonomy and in the difficulty of a standards-based approach to remain incentivizing in terms of sustainability. The EU Taxonomy was found to benefit large undertakings whose operations are already sustainable, as opposed to those pursuing sustainability in their operations.

It was found that the EU Taxonomy has the potential to achieve its objectives by updating the technical screening criteria of the EU Taxonomy frequently enough and by creating a gradual path towards sustainability for transitional and enabling economic activities. In addition, it was found that the inefficiencies of the EU Taxonomy identified in this thesis can be addressed by introducing an emission intensity-based requirement for sustainability disclosure obligations in the Corporate Sustainability Reporting Directive, instead of the current requirements, which are not related to sustainability. Lastly, this thesis found that it is appropriate to wait for the full entry into force of the obligations of the EU Taxonomy before proposing any significant legislative reforms. Once sufficient information on the practical effectiveness of the EU Taxonomy is available, the effectiveness of the EU Taxonomy can be improved by additional instruments or regulatory technical measures, such as those mentioned above.

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• Euroopan unioni - Kansainvälinen ympäristöoikeus - Kestävä kehitys - Sisämarkkinat