Comment on “EU Taxonomy: Mission Impossible” by Kooths (2023)

Abstract Stefan Kooths’s (2023) article, “EU Taxonomy: Mission Impossible,” offers a critical perspective on the European Union (EU) Taxonomy, arguing that it conflicts with free-market principles and could potentially impede economic growth. While Kooths (2023) raises legitimate concerns about bureaucratic burdens and the risk of market distortions, this paper argues that the EU Taxonomy is an essential policy tool to correct market failures, enhance transparency in sustainable finance, and catalyze the transition toward a more sustainable and resilient European economy. This commentary addresses Kooths’s criticisms while providing a more balanced view of the Taxonomy’s potential. Specifically, it highlights its role in addressing environmental externalities, boosting investor confidence by reducing greenwashing, and fostering green growth and innovation both within the EU and globally.