The Sustainable Finance Observatory (SFO) has reiterated calls for the EU to do more to support nature-positive activities within its taxonomy framework, following research that suggests few nature funds are reporting against it. “The taxonomy in its current state is critically limited as a tool to support nature-positive activities,” said the SFO. The EU’s taxonomy entered into force in 2022, although there are currently plans to simplify it. According to the SFO, regulatory inconsistencies mean that biodiversity is currently only weakly integrated into the taxonomy framework. It was initially envisaged that the EU’s taxonomy would cover five macro sectors of economic activities that qualify as substantially contributing to the biodiversity environment objective. However, the SFO stated that only “environmental protection and restoration activities” are covered in the current legislation. “It is difficult to reconcile this political direction of travel with the conclusion of this paper that further development of the taxonomy regulation is necessary to achieve the policy objective of helping to reorient finance towards biodiversity protection and restoration,” the paper read. There has been a significant increase in nature-focused funds in recent years, according to the SFO.
