The ECON Committee position on the review of the Sustainable Finance Disclosure Regulation (SFDR) removes the exclusion of fossil fuel developers from the \u00ab\u00a0transition\u00a0\u00bb category<\/span>,\u00a0<\/span>replacing it with a criterion based on taxonomy aligned capex, fossil fuel\u00a0<\/span>development\u00a0<\/span>capex, and decarbonization targets.<\/span>\u00a0<\/span>Unlike the EU Council,<\/span>\u00a0<\/span>the<\/span>\u00a0<\/span>Committee\u00a0<\/span>acknowled<\/span>g<\/span>es that<\/span><\/span>\u00a0it is impossible to talk about the transition without considering companies’ fossil fuel investment plans<\/span><\/span>.<\/span>\u00a0<\/span>Reclaim<\/span>\u00a0<\/span>Finance welcomes this move and underlines<\/span>\u00a0<\/span>that it<\/span>\u00a0<\/span>significantly reduces<\/span>\u00a0<\/span>the ri<\/span>sk of transition washing. Yet, the NGO also stresses the<\/span>\u00a0<\/span>relevance of the\u00a0<\/span>initial<\/span>\u00a0<\/span>Commis<\/span>sion proposal to exclude fossil fuel\u00a0<\/span>develop<\/span>ers w<\/span>h<\/span>ich<\/span>\u00a0pro<\/span>vided a simple science-based criterion for exclusion<\/span>.<\/span>\u00a0It\u00a0<\/span>calls on<\/span>\u00a0EU policymakers to apply it across all SFDR categories.<\/span>\u00a0<\/span><\/span><\/p>\n<\/div> The ECON Committee has today put forward a proposal which no longer includes the exclusion of fossil fuel developers from the \u00ab\u00a0transition\u00a0\u00bb fund label (1) and has replaced it with other measures designed to limit fossil fuel companies access to transition funds.<\/span>\u00a0<\/span><\/p>\n The Committee is proposing a 20% capex threshold for\u00a0taxonomy-aligned activities\u00a0and a requirement that companies have scope 1 and 2 decarbonization\u00a0strategies\u00a0compatible with the Paris Agreement.\u00a0<\/span>\u00a0<\/span><\/p>\n While the Committee heavily builds on the EU Council position, it moves away from it (2) by adding a requirement to allocate, over a rolling three-year period, a higher average proportion of total capital expenditure (capex) to taxonomy-aligned activities than to the development of new fossil fuel production projects.<\/span><\/p>\n<\/div><\/div><\/div> Unlike the Council, the ECON Committee acknowledges that, to identify whether fossil fuel companies are transitioning, you must look a<\/span>t their fossil fuel investment<\/span>.\u00a0<\/span>E<\/span>very<\/span>\u00a0new fossil fuel projec<\/span>t<\/span>\u00a0puts us on a path of ever-growing emissions that pushes<\/span>\u00a0<\/span>global warming targets out of reach<\/span>.\u00a0<\/span>Investing in sustainable energy does not compensate for investments in fossil fuels<\/span>.\u00a0<\/span>EU policymakers<\/span>\u00a0should therefore go further<\/span>,<\/span>\u00a0<\/span>keep<\/span>\u00a0the exclusion of fossil fuel developers as initially proposed by the Commission and extend it to all SFDR categories.<\/span><\/p>\n<\/div> Paul Schreiber, senior policy analyst at Reclaim Finance<\/span><\/p>\n<\/div><\/div><\/div> Reclaim Finance welcomes the ECON Committee’s recognition of the need to shift investment from fossil fuel to sustainable energy. It acknowledges that the proposed criteria significantly reduce the risk of fossil fuel-related transition washing compared to the Council position (3).<\/span>\u00a0<\/span><\/p>\n Nonetheless, the NGO notes that the ECON Committee criteria suggests new fossil fuel investment can be acceptable if paired with sustainable investment, echoing arguments from fossil fuel lobbies (4), and failing to tackle the need to immediately end fossil fuel development (5).<\/span>\u00a0<\/span><\/p>\n Civil society has continuously pointed out that the exclusion of fossil fuel developers is an easily implementable science-based criteria essential to the SFDR review (6). Reclaim Finance reiterates that point and calls on policymakers to apply it to all SFDR categories (7).\u00a0 <\/span>\u00a0<\/span><\/p>\n<\/div><\/div><\/div>