A body advising the European Commission on rules as to how the bloc classifies green activities has recommended that biodiversity offsets are not included within the scope of the legislation.

The Platform on Sustainable Finance (PSF) has called for the inclusion of biodiversity offsets to be removed from draft delegated acts, published on Apr. 5 by the Commission, which fall under the wider green taxonomy rules, a classification system seeking to establish a list of environmentally sustainable economic activities to guide investors.

The body, which is an expert working group to the EU’s executive arm, has a mandate to provide advice on the usability of the EU taxonomy and wider sustainable finance framework, the technical screening criteria for the rulebook, and monitoring capital flows into sustainable investments.

The feedback report dated May 2023 on draft acts under the taxonomy regulation, also provided a focus on biodiversity regulation, and called for clarity on the specific wording in the Commission draft relating to offsetting.

“Conservation, including restoration, of habitats, ecosystems and species: the word ONLY was introduced to change the phrase ‘not for off-setting’ into ‘not only for off-setting’. This opens the scope for activities which are almost entirely done for off-setting, which contradicts the very intention of the criteria,” the document stated.

“The Platform proposes deleting the word ‘only’.”

The document added that several activities have an “insufficient” ambition level to ensure a substantial contribution to environmental objectives and are therefore not consistent with the Taxonomy Regulation.

Influential bodies such as the Taskforce on Nature Markets, and market participants have recognised the need to clearly separate biodiversity crediting and offsetting practices when establishing regulation for nature finance, with the recommendations from the PSF also suggesting that offsetting should not be encouraged in any legislation from Brussels.

The EU had presented the long-awaited second delegated act of its taxonomy rules last February with controversial inclusion of nuclear and gas within its rulebook.

The draft delegated acts on which PSF has published its latest feedback focus on the next installment of amendments which look to expand scope of what can be labelled green as well as clarify the rules on certain activities.

Delegated acts are a fast-track legal process that requires less scrutiny by EU legislators than overarching directives and as such is directed by the Commission.

By Roy Manuell – roy@carbon-pulse.com

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