Ministry drafts plans to recruit finance, business sectors to fight climate change

The Environmental Protection Ministry on Wednesday unveiled two initiatives aimed at pushing the financial and business sectors away from actions that exacerbate climate change and toward measures that could help the planet heal.

The more significant of the two is a “green” taxonomy — a detailed set of definitions of what it means for a business, an investment or a financial product, such as a fund, to be environmentally friendly, or green. It is a precursor to green labeling of products and businesses.

The draft taxonomy, released for public comment and unveiled at a Climate Solutions Festival in central Israel later in the day, is based on the European Union’s taxonomy, a key plank of the bloc’s attempt to become the first continent with net zero emissions by 2050.

Companies and the financial bodies that help fund them, such as banks, pension and savings institutions, and insurance firms, are coming under varying amounts of pressure worldwide to report to the public about climate risk. At the very least, this means the risk that climate change poses to their operations or investments. In some cases, it also means transparency about the dangers that their activities or investments pose to the climate and the environment.

One of the most common platforms for disclosing these risks is called ESG — Environment, Social and Governance — which combines data on a wide range of issues to rank the sustainability of companies and products.

But without strict, uniform standards for reaching these rankings, ESG scores are difficult to compare and have been used to greenwash both business activities and financial products such as investment funds.

Fish in the Alexander River, central Israel, killed by industrial toxins. (Courtesy, Dr. Ran Farhi)

The taxonomy of the EU — and now Israel — aims to stop that.

Under both of them, an organization will have to show that its operations contribute to at least one out of six environmental objectives, without violating the other five. The objectives are climate change mitigation (reduction); adaptation to the effects of climate change; sustainable use and protection of water and marine resources; transition to a circular economy (in which materials are recycled or reused); pollution prevention and control; and protection and restoration of biodiversity and ecosystems.

The Israeli taxonomy, which will initially be voluntary, divides into the following areas: manufacturing; energy; water, sewage and waste; transportation; building and real estate; data and communications; and professional, scientific and technical activities.

Each chapter breaks down into subheadings. For example, building and real estate contain subheadings on new buildings, renovation of existing ones, and equipment for energy efficiency; electric car recharging; and renewable energy such as solar panels.

Demolition waste. (Petr K, CC BY 2.5, Wikimedia Commons)

Each subheading is then further broken down into the ways it can meet each of the six environmental objectives. For a new building to be classified as green, for example, it might meet the criteria for a circular economy, which include reusing at least 70% of nontoxic building waste generated by the construction.

The draft Israeli taxonomy is available for viewing in Hebrew only and comments can be sent to [email protected] by January 31, 2023.

The second project to be launched by the Environmental Protection Ministry Wednesday is called Zero Hour, designed to help businesses to develop plans for reaching net zero emissions. Those interested can contact [email protected]

Net zero refers to a situation in which a country or a business reduces its carbon emissions as much as possible and offsets what it still has to emit. This can be done by investing in projects that reduce emissions or that sequester (absorb) carbon dioxide from the air and either use it in industry or convert it into a form that can be buried for a long time.

All Israeli businesses of a certain size already report on their emissions, and this will continue. The new plan seeks to help them create a strategy and action plans to gradually reduce their emissions until they are net zero by 2050.

In a press release this week, the ministry said, “An organization that joins the initiative will enjoy many benefits, among them: efficiency in resource consumption and cost reduction as a result of using cleaner and more efficient production technologies and methods; reduced exposure to risks related to the climate crisis and increased attractiveness when it comes to raising capital; a competitive advantage in a world moving to low carbon purchasing; the demonstration of climate leadership and corporate responsibility; and the creation of environmental and social impact.”

In this undated photo, former Prime Minister Naftali Bennett sits with Energy Minister Karine Elharrar at the COP26 conference in Glasgow, Scotland, in November 2021. (Courtesy)

On Monday, the Environmental Protection Ministry said it had failed to officially anchor a verbal pledge made a year ago by then-prime minister Naftali Bennett that Israel would reach net zero carbon emissions by 2050.

Bennett made this commitment just before the UN’s COP26 climate confab in Glasgow in 2021, alongside Energy Minister Karine Elharrar. He told those around him at the time that the pledge would have to be made sooner or later anyway.

Environmental Protection Minister Tamar Zandberg said in a briefing Monday that the Justice Ministry had ruled against passing a government decision on such a matter so close to the elections next week.

Attempts earlier this year to get the net zero commitment included in the climate bill also failed, primarily because of the Finance Ministry’s opposition. That bill passed its first reading in May, but it only commits Israel to reducing emissions by 85 percent by 2050, compared with a 2015 benchmark.

COP27 will take place in the Egyptian resort of Sharm el Sheikh from November 6 to 18.