06 December 2023

EBF response to the EC Call for evidence: EBF calls for a fitness check on sustainable finance framework

As a matter of urgency, the Commission should not only focus on the identification of reporting requirements that may be considered overwhelming, obsolete, unclear or costly, but also allow for pragmatic approaches and consider providing common tools that will substantially reduce the costs...

The reporting of ESG information as such is relatively new but early experience already  shows material implementation and operational challenges not only with the data collection, analysis, monitoring and control for which massive investments in IT and operational processes were necessary, but also the need for simplification given that the Sustainable Finance (SF) Framework has become excessively complex, inconsistent and difficult to apply. As a matter of urgency, the Commission should not only focus on the identification of reporting requirements that may be considered overwhelming, obsolete, unclear or costly, but also allow for pragmatic approaches and consider providing common tools that will substantially reduce the cost of individual reporting and increase data availability

A ‘usability’ omnibus legislative proposal early in the next legislature should be  considered. This proposal should address the following aspects:

1. clarification and harmonization of definitions across the SF Framework;
2. alignment of timing and sequencing;
3. removal of duplications;
4. reduction of administrative costs;
5. explicit integration of the transition finance framework in the existing regulatory  framework;
6. elimination of the unintended consequences and dispensable complexities.

Simplification of the regulatory requirements and increase of their usefulness, usability  and practical application of the framework should be an overarching aspect and objective of the revision. Given that some parts of the EU Framework are still in the making, any new ESG regulatory  requirements need to be well articulated with all other pieces of ESG legislation, with attention paid to sequencing and timing to ensure that companies are able to fulfil their  obligations. Attention must also be paid to the issue of regulatory overload and  international developments, ensuring that the EU ESG regulatory reporting requirements are proportionate and do not threaten the competitiveness of EU businesses.

The EBF plans to issue a report on the usability of the SF Framework which will include concrete suggestions of improvement as well as examples where the SF Framework could be simplified. Once finalized, we will be pleased to share with the European Commission and contribute to its efforts to increase the usability of the SF Framework. The EBF will be also contributing to the debate on the usability as members of the EU Platform on Sustainable Finance.

EBF

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