ESAs Joint Consultation paper on Taxonomy-related sustainability disclosures (SFDR RTS): EBF response
BRUSSELS, 14 March 2021 – The European Banking Federation has responded to the ESAs Joint Consultation paper on Taxonomy-related sustainability disclosures (SFDR RTS).
- Lack of comparable, reliable and standardized data (including from external data providers) and information necessary both for a complete and correct due diligence and classification of the financial products’ sustainability degree remain a critical issue. Companies will only begin to report their taxonomy alignment in 2022.
- It is not practical for the two SFDR-RTSs to come into force at different times as templates implemented from the first RTS would have to be changed when the second RTS becomes applicable. Since the templates are mandatory, they cannot be implemented based on the draft of the second RTS, as this would risk violating the law if the second RTS were delayed. We support ESAs suggestion of an implementation period of at least six months in terms of the mandatory use of the templates. European Commission should consider safeguards in case the RTSs are not finalized early enough to allow sufficient implementation time. Assuming that the final RTS will not be published until autumn 2021, at the earliest, it is expected that full compliance with the first obligations in January 2022 will prove unrealistic. We would also favor a one-year transition phase where the best effort approach is allowed. Such an experimental type of enforcement of one year will benefit both FMPs and their supervisors. It will allow, but support FMPs to try their best efforts to implement the regulation on time, without fear of regulatory reprimands.
- While including assets that cannot be assessed for taxonomy, will not give a thoroughly accurate view of the composition of the portfolio with regards to the non-taxonomy aligned share of the portfolio (which could be made of both non-assessable and non-aligned activities, we do consider this to be appropriate as long as the meaning of the % is clearly stated and understood by investors. To provide investors with clarity, it should be made possible for financial market participants to disclose an additional KPI, which excludes sovereign bonds and other assets that cannot yet be assessed for taxonomy-alignment to ensure that funds are not unduly penalized for investing e.g. in sovereign bonds. The scope of investments taken into account in this second voluntary indicator will expand progressively as taxonomy develops. Requiring government reporting, thus the availability of information on sovereign bonds would also improve reporting. There should also be a blank explanation field, where the FMPs can describe the product’s investments and the investments’ relation to the EU taxonomy in more detail.
- To provide investors with clarity, it is suggested that financial market participants should clearly state in a check box solution whether the financial product:
- invests in activities that contribute to an environmental objective [article 9 products, taxonomy aligned or non-taxonomy aligned];
- invests in environmentally sustainable investments [=taxonomy aligned];
- promotes environmental characteristics [Article 8 products];
- invests in socially sustainable investments Art. 9];
- promotes social characteristics [Art. 8];
- invests in both environmentally and socially sustainable investments (Article 9, either taxonomy aligned or other);
- promotes environmental and social characteristics (Article 8).
Find the EBF response to this consultation by clicking the ‘full document’ button below:
FOR MORE INFORMATION:
Sustainable Finance page on the EBF website: CLICK HERE
Denisa Avarmaete, Senior Policy Adviser, Sustainable Finance, EBF
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The European Banking Federation is the voice of the European banking sector, bringing together national banking associations from across Europe. The EBF is committed to a thriving European economy that is underpinned by a stable, secure and inclusive financial ecosystem, and to a flourishing society where financing is available to fund the dreams of citizens, businesses and innovators everywhere.