Media advisory

Coming up: ‘Taxonomy Day’ at EU court with multiple key rulings expected on 10 September  

 

On 10 September, the General Court of the EU will deliver rulings on two pivotal cases challenging what the European Commission has wrongly labelled as “green” in its sustainable finance rulebook, known as the Taxonomy. 

ClientEarth lawyer Quentin Mautray said: “10 September will be a crucial day. The Court’s rulings will not only shape which investments can be considered ‘green’ in the future, but also clarify how fundamental principles, like the ‘do no significant harm’ rule, should be interpreted – principles that the Commission is currently trying to undermine in its deregulation frenzy." 

 

What is the EU Taxonomy? 

The EU Taxonomy is a classification system establishing which investments can be regarded as environmentally sustainable. It is designed to offer a standardised list of “green” investments for companies, investors, banks, and policymakers, helping to channel funds toward a fair and sustainable transition. 

The European Commission has controversially decided that energy from fossil gas-fired power, forest biomass, bio-based plastics, chemicals used to make plastics would be classified as “green” or “transitional” investments. This has led to several lawsuits, which are now coming to their conclusions.  

 

Ruling #1: ClientEarth v Commission on biomass, bioplastics and chemicals used to make plastics 

In September 2022, ClientEarth filed a lawsuit against the European Commission for unlawfully labelling the burning of forest biomass to produce energy, and the manufacture of bio-based plastics and chemicals used to make plastics as “sustainable” in the EU taxonomy. 

Legal grounds 

  • The Commission misapplied the Taxonomy Regulation, selectively using criteria and ignoring disqualifying provisions. 

  • It classified burning forest biomass as climate-friendly despite scientific evidence to the contrary. 

  • It failed to ensure that burning forest biomass to produce energy did not 'significantly harm' the transition to a circular economy, a requirement of the Taxonomy Regulation. 

  • It designated bio-based plastics and organic chemicals as transitional, disregarding their full life cycle, lock-in effects on fossil fuels, increased waste incineration, and clear harm to marine ecosystems from spills and plastic pollution. 

  • It included chemicals deemed substances of very high concern, undermining the Regulation’s objective of pollution prevention. 

Legal procedure 

ClientEarth made use of the internal review procedure, available since the landmark 2021 reform of EU access to justice laws, made possible after a decade-long battle led by ClientEarth. This reform removed key barriers that had previously stopped NGOs and individuals from bringing cases to court over environmental harm. 

Environmental NGOs now have the right to file an internal review request and ask EU institutions and bodies – in this case the European Commission – to review their own decisions for contravening EU environmental law. The Commission must officially reply, and if it fails to fix the legal violation, the claimants can take the case to the Court of Justice of the EU. In this instance, the internal review request was sent to the European Commission in February 2022, and the court case was ultimately filed in September 2022.  

The Court of Justice has never annulled a negative decision from the EU institutions on substantive grounds in an internal review case. Annulment of the Commission’s decision in this case would be a groundbreaking first. 

 

Ruling #2: Austria v Commission on fossil gas-fired power and nuclear 

In October 2022, Austria filed a lawsuit against the European Commission over its decision to label fossil gas-fired power and nuclear power as “green” in the controversial second climate delegated act under the Taxonomy. 

The ClientEarth and partners case  

A separate case was filed in April 2023 by ClientEarth, WWF EU, Transport & Environment and BUND. These NGOs challenged the European Commission for unlawfully classifying fossil gas-fired power as “green”.  

The NGOs used the internal review procedure, whilst Austria, as a Member State, was able to go directly to the Court. 

Given that there are some similarities between the two cases, the Court has decided to pause the NGOs’ case until it delivers a ruling on the Austrian case. The 10 September ruling will therefore be important for the outcome of the NGOs’ challenge.  

Legal grounds  

In their case, the NGOs argue that: 

  • The Commission breached its own Taxonomy rules by: 

  • Labelling fossil gas-fired power as a “transitional” and therefore “sustainable” activity, although it doesn’t meet the strict conditions in the Taxonomy Regulation. 

  • Not properly checking whether there are existing feasible low-carbon alternatives, despite the renewable boom. 

  • Not making sure the criteria were based on solid science and not considering the full life cycle of fossil gas, or accounting for the risk that these assets could become stranded in a greener economy. 

  • Failing to guarantee that these activities wouldn’t cause significant environmental harm while trying to reduce emissions. 

  • The Commission violated the European Climate Law 

  • Before adopting new rules, the Commission must check that they are consistent with the EU’s climate targets for 2030, 2040, and 2050. The Commission didn’t perform or publish this check for the fossil gas-fired power classification under the Taxonomy. 

Ongoing revision of the Taxonomy climate delegated act 

As part of its new “simplification” agenda, the European Commission has amended the climate delegated act that is the subject of ClientEarth’s challenges. This included technical changes to what is considered to “do no significant harm” for chemicals. For example, the Commission’s new decision reduces tenfold the number of substances whose production or use is considered to cause significant harm, from about 5.000 to about 500 hazardous substances. This and other changes make the alleged breaches of environmental law even worse. 

In response to a request from ClientEarth, the Commission admitted it had not carried out a full climate consistency check before proposing these changes, raising further questions about whether the revision aligns with the EU’s own climate goals. 

The European Parliament and the Council can still veto the revised delegated act until 4 November 2025. 

If the court ruling of 10 September sides with ClientEarth, this would also call this new delegated act into question.  

More broadly, the court rulings could help clarify what the Do No Significant Harm principle means in law. This principle is not only included in the Taxonomy Regulation but also other pieces of EU law. A stronger interpretation would therefore be important not only to private green finance, but also to how public money is spent under many EU policies. 

 

For further information or interview requests, please contact: 

Anais Rivalier, arivalier@clientearth.org, +44 (0)7851 926887  

Angelika Pullen, apullen@wwf.eu, +32 473 94 79 66

 

About ClientEarth

ClientEarth is a non-profit organisation that uses the law to create systemic change that protects the Earth for – and with – its inhabitants. We are tackling climate change, protecting nature and stopping pollution, with partners and citizens around the globe. We hold industry and governments to account and defend everyone’s right to a healthy world. ClientEarth teams in Europe, Asia and the USA work to shape, implement and enforce the law, to build a future for our planet in which people and nature can thrive together.