To unlock the full potential of the EU Taxonomy \u2013 a novel tool for steering investments towards a climate resilient, net-zero and sustainable economy \u2013 ongoing refinements and simplifications are essential.<\/p>\n
In response to the European Commission’s mandate, the Platform on Sustainable Finance, an advisory body to the Commission, published a report on 5\/2 with evidence\u2011based recommendations aiming at simplifying taxonomy reporting while enhancing its effectiveness.<\/p>\n
The Platform estimates that the following 4 proposals will together contribute to reducing the reporting of non-financial companies by over 1\/3 compared to the current state:<\/p>\n
\u2b55 1. More than one-third reduction in corporate reporting burden with:<\/p>\n
\u27a1\ufe0f Adjusting the OpEx KPI as a voluntary disclosure, except for R&D.
\n\u27a1\ufe0f Introducing a materiality threshold for reporting the Turnover, OpEx, CapEx KPIs and the combined KPIs of financial companies, in line with the Accounting Directive.
\n\u27a1\ufe0f Enhancing the alignment with financial reporting.
\n\u27a1\ufe0f Simplifying reporting templates, with a clear reduction of data points to limit the reporting to information that is relevant for making business decisions.<\/p>\n
\u2b55 2. A simplified GAR that encourages green and transition lending:<\/p>\n
\u27a1\ufe0f Ensuring a symmetrical GAR with similar numerator and denominator composition.
\n\u27a1\ufe0f Simplifying retail exposure reporting, focusing on substantial contribution.
\n\u27a1\ufe0f Allowing for estimates and proxies for reporting, in conjunction with safe harbours to protect against greenwashing allegations.
\n\u27a1\ufe0f The materiality principle should apply to the combined KPI for financial undertakings, excluding immaterial business segments not consolidated under the Accounting Directive.<\/p>\n
\u2b55 3. A practical approach to DNSH criteria:<\/p>\n
\u27a1\ufe0f Introducing a lighter compliance assessment process (regarding evidence of compliance, documentation and\/or on EU regulations).
\n\u27a1\ufe0f All DNSH criteria should be reviewed as part of the scheduled reviews of various delegated acts, prioritising their usability and practicality for financial and non financial companies.
\n\u27a1\ufe0f Introducing a “comply or explain” approach for DNSH assessment of the Turnover KPI, as a temporary measure.<\/p>\n
\u2b55 4. Helping SMEs access sustainable finance:<\/p>\n
\u27a1\ufe0f Adopting a streamlined and voluntary approach for banks and investors\u2019 exposures to unlisted SMEs.
\n\u27a1\ufe0f Adopting a simplified approach to the Taxonomy for listed SMEs.<\/p>\n
The use of estimates and proxies, combined with a streamlined DNSH assessment process, is essential for rapidly and significantly reducing the reporting burden on financial companies.<\/p>\n
Additionally, both financial and non-financial companies will benefit from the introduction of a materiality approach, further enhancing proportionality and efficiency in reporting.<\/p>\n