McGuinness: “Green taxonomy does not apply to defense funding”

Brussels – The Green Deal does not apply to defense, said Mairead McGuinness, Commissioner for Markets and Financial Services, clarifying how security should not be minded in terms of financing and granting credit lines despite a European policy that pays attention to sustainable investments and that taxonomy that, precisely, regulates low-carbon footprint activities. “The European Union’s sustainable financial framework does not impose any limitation on the financing of the defense sector,” the commissioner explains in response to a question raised by Tomáš Zdechovský (EPP).

An emphasis made indispensable at a time when, in the European Union, there is a need to revive an industrial sector that is increasingly strategic and on which there are not a few difficulties, as its inability to supply one million munitions to Ukraine shows. If we then throw in sustainability goals, it would become even more complicated to accelerate the sector’s production.

There is a problem of perception, the EPP MEP points out in his question. The defense industry “is seen as ‘dirty’ or unsustainable and most banks do not provide the necessary investment,”  and that is why the EU executive should  explain, with suggestions for taxonomy changes and a revision of sustainability indices. 

McGuinness offers an answer that lends itself to at least two readings: some may consider it ‘convenient,’ someone else may interpret it in the sense of flexibility. “The EU taxonomy focuses on activities that have the greatest potential to make a substantial contribution to one or more of the EU’s environmental objectives,” is the commissioner’s premise: “The mere fact that a company does not have taxonomy-aligned activities does not mean that conclusions can be drawn regarding the company’s environmental performance.” Failure to meet sustainability criteria does not imply automatic unsustainability of the business. 

A message to banks and lenders: given that the taxonomy will not be changed, because McGuinness makes no mention of it, loans must be made to put Europe on a secure footing. With the understanding that “as in any sector, undertakings involved in defence-related activities can claim taxonomy-alignment for eligible horizontal investments,” she adds. 

In any case, Brussels is not standing idle. The defense ‘greening’ issue is known and is real, with “the Commission is in regular contact with defense industry and financial sector stakeholders regarding access to funding.”