Frida Faxborn

Taxonomy for sustainable investment must harness the potential of digitalization for positive impact

Sustainability
In June, the EU adopted a regulation establishing a framework to facilitate sustainable investment, known as the taxonomy. It will be a tool to classify which investments are environmentally sustainable, with the aim of ensuring that the financial sector has common guidelines on which investments can be called green.

As a result of ongoing consultations on the delegated acts that clarify the framework, IT&Telekomföretagen has submitted the following to the Government Offices:

  • The fact that the high-profile issue of Swedish hydropower being classified as unsustainable is of the utmost importance to the IT and telecom industry. Electricity is of great importance to our industry and the fact that it is deemed to come from sustainable electricity is a very important aspect of the industry's climate and sustainability work. It is therefore of great importance that the government pushes the issue of Swedish hydropower being assessed as sustainable.
  • That the EU Green Deal emphasizes that digitalization is seen as an important factor in reducing carbon use in the EU. It is therefore unfortunate that the ICT sector is only proposed to be measured on two things: 1. Whether you have a green data center (based on the EU CoC for DC) and 2. Whether you offer services around data-driven monitoring and modeling of climate impact. The proposal for the IT and telecom industry is therefore very limited. This means that the positive effects that the industry can contribute with solutions and technologies for a sustainable transition will not be realized.
  • That the draft under consultation contains an introductory text describing the potential for a positive impact from our industry, but lacks actual proposals on how the positive impact can be measured, other than by providing services to measure and monitor climate impact.
  • That our sector is usually said to account for 2% of global emissions but could influence the other 98%. The way the taxonomy is designed misses the whole idea that our sector can be one of the key enablers in transforming other sectors to become more sustainable through the services our sector offers, thus facilitating the transition to a low-carbon circular economy. It is therefore a narrow way to classify economic activities of an entire industry as green or not green.
  • Given this narrow assessment, the financial industry may choose to ignore the IT and telecom sector when making investments. This reduces the industry's opportunities to take advantage of this financing instrument, which in turn affects the entire industry's ability to contribute to a sustainable societal transition and development.
  • It is crucial that the assessment criteria in the taxonomy are fair and truly promote climate benefits, given their potential influence on financial investments. Thus, there is a need to introduce future-proof and flexible criteria that measure potential positive impacts so that manufacturers can leverage other more low-carbon technologies or ICT as an enabler.
  • Sweden is one of the world's most innovative countries in terms of developing digital solutions. The government's work must therefore take this into account in the continued work on the taxonomy so that companies are not disadvantaged in an unfavorable way.

Frida Faxborn
Industrial policy expert