European pension funds are required to declare their investments in nuclear energy and natural gas as sustainable under the EU’s sustainable taxonomy, meaning extra reporting work for pension funds.

Previous critics of the European Commission’s proposal, including the Netherlands’ Pensioenfederatie, are disappointed with the decision.

On Wednesday, 278 MEPs voted against the sustainable label for gas and nuclear, leaving them 75 short of the 353 votes needed to overturn the EC’s decision to include the two energy sources in the EU’s sustainable taxonomy.

“Pension funds will have to abide by the extended taxonomy in their reporting once the regulation has been effected. We would have preferred a separate transitional category for activities such as natural gas and nuclear energy, but pension funds will now have to accept the taxonomy as it is,” a spokesperson for the Dutch pension federation, one of the most vocal opponents of the Commission’s taxonomy proposal, commented.

Greenpeace to start court case over taxonomy

Environmental NGO Greenpeace vowed it will take the Commission to the European Court of Justice over its decision to include gas and nuclear energy in the EU’s list of sustainable investments.

Greenpeace EU sustainable finance campaigner Ariadna Rodrigo said: “It’s dirty politics and it’s an outrageous outcome to label gas and nuclear as green and keep more money flowing to Putin’s war chest, but now we will fight this in the courts. The EU Commission’s shameful backroom dealing on behalf of the fossil fuel and nuclear industries won’t help them there.”

Brenda Kramer, senior adviser responsible investment at Dutch pension asset manager PGGM and also a member of the EU Platform on Sustainable Finance which advised against including nuclear energy and natural gas in the taxonomy several months ago, said: “I’m of course disappointed that our advice has not been followed.”

Matti Leppälä, chief executive officer of European pension lobby PensionsEurope, noted that its members have “diverging views” on the taxonomy. “Therefore, we don’t have a PensionsEurope position and will not aim to develop one,” he added.

Grey area

Robert Sawbridge, head of responsible investment at asset manager Insight Investment, said the European Parliament vote on Wednesday was somewhat positive for investments in gas and nuclear power companies – but that it was still debatable whether those activities really were sustainable.

“Insight is of the view that a pragmatic approach needs to be taken to the transition and in that regard permitting investment in best-in-class nuclear and gas activities is likely to be an important part of achieving any carbon goals in a way that also supports a just transition,” he said.

“Equally, defining these activities as sustainable in their own right does not seem correct,” he added.

The issue had been a really tough one for the EU to address, and voting showed how opinion was split, Sawbridge said.

“From an investment perspective, we see this as marginally credit positive for investments in these companies, which may now benefit from additional financing support via investment strategies aligned to the SFDR regime as Article 8 and 9,” he said, adding: “In reality though, we think this continues to be a grey area.”

Although the taxonomy might theoretically allow investment in those industries, Sawbridge said, investors would expect transparency and to prove alignment between potential investments and their chosen investment approach and objectives.


A spokesperson for Dutch healthcare scheme PFZW said the taxonomy brings additional work as its asset manager PGGM will keep its own separate sustainability reporting in which the UN’s Sustainable Development Goals (SDGs) take centre stage.

He said: “Currently, our SDI (Sustainable Development Investments) taxonomy is not compatible with the EU taxonomy. Our SDI investments do not include natural gas and nuclear energy, but on the other hand the EU taxonomy has some detailed requirements on certain materials that cannot be used for products to be considered sustainable. Our SDI taxonomy doesn’t account for this.”

PGGM expects, however, that its own reporting and the taxonomy’s reporting requirements will gradually converge. “The taxonomy is now only focused on sustainable investing but we believe its scope will gradually broaden, and eventually may replace the SDGs as our main methodological framework,” according to the spokesperson.

Metal industry scheme PMT said it wil abide by the rules to report on its investments that are aligned with the new taxonomy, but it is planning to separately report on the investments it considers sustainable by its own definition, according to Rebecca Wörner, investment advisor at the pension scheme.

She said: “Strictly speaking, all taxonomy-aligned investments can be considered sustainable, but we believe there will be room for us to indicate that we do not consider natural gas and nuclear energy as such. In any case, we have designed a concept methodology for our sustainable investments that does not include either.”

‘Credibility on the line’

Germany’s Union Investment was one of few asset managers to publicly denounce the taxonomy. The firm’s head of ESG Henrik Pontzen said: “This puts the EU taxonomy’s credibility on the line. The claim to be a global pioneer in setting sustainability standards cannot be fulfilled in this way.”

He added: “In our sustainability funds, we have excluded nuclear power producers for many years. We are sticking to this assessment due to the catastrophic risks of nuclear power plants and the unresolved question of final storage.”

Dutch asset manager NN Investment Partners (NN IP) said it will ignore the taxonomy in the sense that it will continue to shun nuclear energy and natural gas for its green bond funds.

Equity impact funds, however, can invest in companies that extract natural gas as long as they derive less than 10% of their income from shale gas. “The EU’s vision on natural gas and nuclear energy does not change how we view these activities,” said NN IP’s chief sustainability officer Adrie Heinsbroek.

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