I never heard of the European Union’s taxonomy regulation before.
It’s designed to increase investment in green economic activities, and discourage investment in environmentally sensitive ones. Essentially it codifies the Poseidon Principles into an EU policy.
The term ‘taxonomy’ comes from the intent to classify investments with regard to a number of criteria. In other words, you can’t call an investment ‘green’ unless it speaks to these issues, and meets established criteria.
According to the author, the taxonomy regulation has several main environmental points, as well as social ones:
- climate change mitigation
- climate change adaptation
- sustainable use and protection of water and marine resources
- transition to a circular economy
- pollution prevention and control
- protection and restoration of biodiversity and ecosystems.
The author is a bit concerned that the regulation will give non-European companies an advantage in pursuing shipping investments. And he’s worried about the effect on shipping finance, though he supports the idea of green investment. He just thinks there will be a time of disruption in the financing of maritime activities, with good long-term effects but some short-range dislocation.
That dislocation could affect supply chains in general. For instance, slower steaming will effectively reduce the capacity on main shipping lanes. And the fact that newbuild years are booked two or more years ahead will prevent faster turnover or augmentation of the fleet with cleaner ships.
Nonetheless, adoption will clarify what a green investment means, and will reduce greenwashing— publicizing efforts that are relatively small improvements as major contributions to environmental improvement. And, especially in Europe, it will put down a marker for firms and individuals to reach for.
Dagfinn Lunde April 21, 2022
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