Magic. I cannot think of another word to describe how politics can solve problems. Simply by using different definitions. And gone is the problem. At least in the political world.

The European Union has for several years now been making brave efforts to come up with a definition of ‘sustainable’. In Brussels they call this the ‘taxonomy’ and its purpose is to ensure that money from both the financial sector and governments is channelled towards green projects. The first two sheets of this green spreadsheet are set to be implemented as soon as possible and concern climate adaptation and climate change mitigation. Four more sheets will follow, focusing, among other things, on the circular economy and biodiversity.

The definitions in those sheets are based on science: which investments fit in a sustainable world. We already know a lot about climate-related issues: about the global CO2 budget and the emissions caused by a range of activities, as well as about technologies that could help to make the economy carbon neutral. The first proposal for the taxonomy was, therefore, largely based on this knowledge.

But that was before politics really started to put its oar in. Because nuclear energy has suddenly become green. And so has natural gas. Political horse-trading between the French (nuclear) and Eastern Europe (natural gas). You could argue in favour of nuclear energy that it contributes to a reduction of greenhouse gas emissions. But as long as there is no solution for nuclear waste it remains unsustainable. And admittedly, natural gas is better than brown coal but it is definitely not green. This is typical for European politics: to confuse less unsustainable with sustainable. It would have made sense to introduce an extra class for ‘transition’ investments, such as natural gas. But to label them green is an escape route to finance the status quo as sustainable. Which is clearly not the case.

It goes even further than the already fairly extreme scenario of the Netflix blockbuster Don’t Look Up. (spoiler alert!) In this film the problem of a meteorite that is threatening to hit earth is recognised in the end, but it is not handled correctly. The meteorite eventually just hits and destroys our planet. In real life, it goes even further: we have a problem (climate change) but the glaringly obvious solution - to reduce greenhouse gas emissions as quickly as possible - is politically inconvenient. So what do we do? We change science. Or to follow the analogy of Don’t look up: We simply say that it will not hit or that it will not hit until much later, and we do nothing.

And so we carry the taxonomy to its grave. Because if politics so obviously uses greenwashing, how can we prevent companies from following suit? And what will this mean for the next parts of the taxonomy that have a less firm scientific base in terms of metrics compared to climate? Does this mean that every company that has a rubbish bin is circular? Does every company that has a tree on its premises contribute to biodiversity? The answers will be clear to ordinary people, but not thanks to the upcoming European taxonomy.

Political reality is very flexible, but the limits of our ecosystem are unyielding. Political compromises do not move those limits. Only the problems.

This is a translation of Hans Stegeman's column in Het Financieele Dagblad, published January 4th, 2022.