A request that gas and nuclear operations be excluded from the EU's Taxonomy Delegated Act was rejected by the European Parliament.
The Commission has not objected to including the sectors within the Taxonomy, with 278 MEPs voting in favor of the resolution, 328 voting against it, and 33 voting with their abstentions.
This might start in force in January 2023.
The Commission also thinks that both gas and nuclear power have important roles to play in the green economy. Both energy sources may play a crucial role in the move toward net-zero emissions.
As a result, the inclusion of specific gas and nuclear activities would have a time limit and be subject to guidelines and requirements for transparency.
Member nations like Austria and Luxembourg, both of which threatened legal action against the proposal, had voiced strong opposition to the inclusion of both nuclear and gas within the Taxonomy.
It is anticipated that both countries will challenge the law in court after the outcome.
"The EU Parliament has agreed that nuclear power and gas-fired power generation will be classified as sustainable under the EU taxonomy," Henrik Pontzen, head of ESG at Union Investment, said in response to the objection.
"This puts the EU taxonomy's credibility on the line. The claim to be a global pioneer in setting sustainability standards cannot be fulfilled in this way."
"In our sustainability funds, we have excluded nuclear power producers for many years. We are sticking to this assessment due to the catastrophic risks of nuclear power plants and the unresolved question of final storage."
Simonetta Spavieri, senior engagement analyst at Royal London Asset Management, continued, "allowing for unabated gas to be labelled ‘green’ undermines the rigorous science-based approach the EU Technical Expert Group on sustainable finance had taken."
"It highlights the political nature of sustainable development. Investors are left to deal with this incoherence and knowing other taxonomies that are being developed globally are taking a slightly different stance on key issues, complexity will only expand."
By fLEXI tEAM