How Japanese Industry Lobbied Against a Strong EU Taxonomy

An InfluenceMap Briefing
April 2nd, 2020
  • While the majority of lobbying came from within the European Union, the policy has also seen opposition from international business trade associations, seemingly concerned at the global implications of an ambitious EU taxonomy. International financial trade association, the Institute of International Finance (IIF), has also engaged with the European Commission, arguing against what it calls "very ambitious and potentially unrealistic criteria… particularly for the production of electricity from hydropower and gas combustion.”

  • The powerful Japan Business Federation (Keidanren) led a group of Japanese trade associations in engaging directly with the European Commission to oppose a progressive Taxonomy. In a September 2019 position paper assessed by InfluenceMap, Keidanren argued that the Taxonomy could “(destabilize) international financial markets” and that standardisation could stifle “business-led disruptive innovation”. Keidanren was scored by this research as being the most oppositional industry association of any origin (EU or otherwise) to an ambitious EU Taxonomy.

  • Keidanren stated that the proposed Taxonomy did not reflect the concerns of non-EU countries. It warned against the international standardisation of the Taxonomy. Furthermore, whilst opposing a ‘brown’ taxonomy on the basis that it could create “reputational risk” for certain sectors, Keidanren suggested that the green taxonomy should not be “arbitrarily eliminating specific economic activities, and the use of technologies and products, particularly fossil fuel”.

  • In taking these positions, Keidanren’s lobbying contradicted a group of positive financial institutions including Aviva and BNP Paribas who have consistently supported the view that by setting out common criteria, the Taxonomy would facilitate the flow of capital towards sustainable investments. Aviva and Natixis also stressed the importance of a ‘brown’ taxonomy in setting out how damaging different activities are. In its final report in March 2020, the European Commission’s Technical Expert Group reiterated how crucial the development of a ‘brown’ taxonomy is to the transition to a low-carbon economy.

  • In addition to Keidanren, InfluenceMap has found evidence of lobbying on the Taxonomy by seven other Japanese trade associations (all of which are Keidanren members with exception of The Japan Business Council in Europe) looking to weaken the Taxonomy.

The EU Taxonomy is the cornerstone of Europe’s sustainable finance policy stream and will have profound implications towards flow of capital towards climate solutions. It is consistent with the goals of the Paris Agreement and the most thoroughly developed classification we have. We advocate for using the EU Taxonomy as the foundation for harmonisation. A common design approach between international taxonomies would enable mutual recognition of Taxonomy frameworks and support market understanding of the environmental performance of economic activities and investments across markets.

Helena Vines Fiestas

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