The EACB considers the possibility to extend the taxonomy to support economic activities in transition as important step for the full achievement of the sustainable finance framework. Some of our members fear that a red taxonomy stigmatizes sectors that are currently still playing an important part in supplying people with goods and services. A shared view is that the SH taxonomy should not discourage rather set pathways for transition and that the overall framework should be simple to apply.
The framework should properly incentivize companies to improve the environmental performance. It should be an opportunity for the companies to position themselves as being “on track”. In this respect, even the definition “Significantly harmful - but can improve to sustainability” or "Significantly harmful - but can improve not to do significant harm” as well as “red taxonomy” in itself could lead to wrong perception by focusing on the static vision instead of the dynamic development (forward looking approach). A more dynamic and positive formula could be used (i.e. “different levels of activities in transition”).
For this reason, we believe that the taxonomy should prioritize the transitioning dimension, distinguishing primarily substantial contribution and intermediate performance as environmental performance levels.
Our Members think that industries and sectors should be given the chance to adapt their business models to the transition. Suddenly imposed criteria for significantly harmful activities could lead to increasing transitional risks for those activities. Such risks could appear in form of financial outflows or in form of financing constraints. Instead, these sectors should be enabled to adapt their business models to the transition. Thus, the disadvantages would be mitigated if taxonomy criteria would be primarily developed to define a staged approach in transition.
Finally, keeping the whole taxonomy as simple as possible without extra reporting, would limiting the administrative burden and associated costs, mitigating possible disadvantages.
For further details or questions please contact:
Ms. Elisa Bevilacqua, Head of Department (firstname.lastname@example.org)
Mr. Giovanni Betti, Adviser Sustainable Finance (email@example.com)