Environmental assessments and sustainable finance frameworks: will the EU Taxonomy change the mindset over the contribution of EIA to sustainable development?

ABSTRACT Environmental Assessment is a globally mandated tool for helping to deliver sustainable development, yet decision makers frequently use it to legitimise trade-offs between socio-economic gains and environmental losses. As a result, environmental assessment is frequently criticised for its inability to prevent incremental environmental degradation. However, new frameworks stipulating what can be deemed as ‘sustainable investment’ or ‘sustainable economic activity’ for financing under sustainable finance frameworks are being developed. These are known as taxonomies of sustainable investments, and they have the potential to radically change the environmental outcomes of decision making, based on a ‘significant contribution’ and ‘do no significant harm’ approach to critical environmental components. We illustrate how they can change the mindset for the sustainable development expectations associated with policy tools like environmental assessment. Further, we demonstrate that emerging taxonomies can benefit from integration with existing environmental assessment systems. Conversely, an appropriate use of taxonomies of sustainable investments in environmental assessment systems can further strengthen the existing EA systems and allow them to better address the environmental sustainability priorities of the 21st century.