The European Parliament has voted to include nuclear and gas in the EU’s green taxonomy, which is meant to steer financing to environmentally responsible investments. The Luxembourg and Austrian governments have said they will challenge this classification in court, arguing the fuel sources are not truly sustainable.

Earlier this year, Delano examined the potential impact of including nuclear and gas for the investment funds sector.

Investment professionals outlined complex and often nuanced views of the controversy. They warned that the rules could fragment the single European investment fund market, although fractures within and between markets had already existed.

On the other hand, the taxonomy had not sparked any significant reorganisation at fund firms. They told Delano that the taxonomy, while useful as an informational tool, was unlikely to make a massive impact on investor decisions and that the impact on investee companies was debatable.

In addition, industry executives noted that the EU is not the sole jurisdiction developing green investing standards, which puts even more pressure on the bloc to get the European taxonomy right.