EBF advisor: Denisa Avermaete

Publication date: 27 February 2019

EBF Executive summary :

The green finance market functions relatively well and does not necessarily need an EU taxonomy for “obvious” environmental assets, such as solar panels, wind farms, green buildings or forestry. Market participants with such assets do not feel limitations to issue in green format and investors are in general fine with the definitions.

• The growth of the financing market markets must take place in other sectors, especially manufacturing and services. For these markets, guidance by means of a good taxonomy is needed.
• Mitigation only covers a small part of the lending/financing activities of the banking sector. The banking sector, which finances around 70 percent of the EU economy plays a crucial role in achieving the objectives of the Paris agreement and in financing the transformation towards a sustainable economy and society model. The sustainable financing markets must mirror the sustainable developments in the real economy and be able to finance and support that development without too many limitations. Most companies are at different stages in their transition journey towards low-carbon and sustainable activities. Banks have a role to play in supporting corporates on this journey, providing the funding needed to achieve this transformation.  While the long-term objectives and ambitions could and should be high, we must ensure that steps being taken towards increased sustainability are included, encouraged and supported by the EU legislation.
• The classification of sustainable products in the Taxonomy must be improved to be more complete and inclusive, resulting in a  collection of environmental activity codes which can be implemented in fully automated systems of financial market participants, improving the usability for the main users of the Taxonomy

We strongly suggest:

1. using and expanding existing activity classifications including NACE, of the revised European system of integrated statistical classifications, the which distinguishes between activities (NACE), products (CPA) and goods/services (PRODCOM/CN); and
2. classifying each of them into 16 environmental CEPA/CReMA purposes/domains

(See enclosure EBF ref. 036070)

Specific comments on selected  sectors are included in the full EBF response that can be found at www.ebf.eu