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While recognizing the challenge of the tasks, it is important to find a balance between:
It needs to be kept in mind that only “easy to understand” and “ready to use” tools will enable the mobilization of all actors in the required scale and timeframe.
A taxonomy that would be too burdensome to implement would not achieve the objectives. Consequently, EBF would advocate for a well-formulated, operationally feasible system with a forward-looking perspective, that would pave the way for a gradual shift towards increased sustainability of activities, companies and assets.
The extension of the scope of the Regulation to cover other sustainability objectives from the earliest possible stage, subject to the availability of reliable data would be welcome as it would ensure avoiding risks of efficiency losses, as banks’ internal models need to be adapted every time a change is introduced. However, EBF also recognizes the urgency to accelerate the environmental and climate issues, including the support to those not-yet sustainable activities in their transition and greater emphasis on the environmental issues.
EBF sees the taxonomy as a common language that could be applied by all market participants to all their activities. The commonly accepted framework or classification system should be designed in a way that will enable an unambiguous identification of all sustainable activities, companies and assets.
The European banking sector supports the shift towards a sustainable social and economic model. Most companies are at different stages in their transition journey towards low-carbon activities. Banks have a particular role to play in supporting corporates in this journey. This is especially important when considering the role that stewardship plays in investment management through engagement with companies, or when banks financing of bridging activities help those companies building progressively their sustainability strategy. As a result, EBF recommend concentrating efforts in building a taxonomy for sustainable activities which can help those companies build their low-carbon strategy progressively. EBF sees the purpose of this regulation proposal as to facilitate sustainable finance and, as such, its focus should be on the positive and not the negative environmental impact. Focusing on the negative impact could lead to an abrupt and disorderly transition. Consequently, EBF advocates for a gradual approach, to achieve a solid and generally accepted framework on sustainable activities first