Markets, Science and Politics: The EU Taxonomy for Sustainable Activities and Global Climate Governance

Contrasting discourses on global climate change governance prioritize different actors. Whether the central focus is given to legal frameworks, state intervention, technological developments, scientific documentation, climate dictatorship, democratic decision-making, or market optimization (or a mix of these approaches) is a question of intense debate and conflict. The central form of global climate change governance has hitherto overarchingly been focused on states through the major institutions of global governance – such as the World Bank, IMF, the UN, WTO, and the COP-meetings.

In 2020, the EU implemented a Taxonomy for sustainable activities as a central part of its Green Deal and the taxonomy serves as the EU's cornerstone for sustainable finance. It is legally founded on the EU Taxonomy Regulation which prescribes the taxonomy to provide a science-based classification system of sustainable economic activities. It provides technical criteria and thresholds to 1) when an economic activity is considered to make a substantial contribution to one or more of six environmental sustainability objectives, and simultaneously 2) doing no significant harm to any of the remaining objectives. The taxonomy aims to provide corporations with a universalized definition of sustainability with science-based trajectories and alignment with the Paris Agreement. The taxonomy is intended to fill the information gap on sustainability in the financial economy, and should thus, through new information disclosure regimes, accommodate the fundamental problem of the investment gap which denotes that private capital is indispensable to financing the green transition of corporations and thereby the economy.