Although the EACB welcomes the staged approach proposed by the EC in the draft delegated Act (DDA) to Art. 8, the Association has raised few remaining concerns.
The first is that the obligations for financial undertakings (FU) require clients’ data that will only be disclosed by non-financial companies (NFC) in 2023. Thus we propose a one year reporting gap between non-financial and financial companies. The unavailability of non-financial companies’ taxonomy data in 2022 affects also the SFDR disclosure and Pillar 3 disclosures (draft EBA ITS disclosure in June 2023 on 2022 data). Credit institutions need data from the real economy in a standardised audited format.
Another concern is that many smaller clients and investees do not disclose taxonomy data (not in the perimeter of the NFRD). Thus we have recommended the Commission to adopt a materiality threshold in the DDA, for loans and investments to be subject to reporting if they exceed a certain threshold e.g. 10 million EUR. This would allow for a focused Green Asset Ratio (GAR) of Credit institutions and Green Investment Ratio (GIR) of Asset Managers, increasing feasibility especially for credit institution’s reporting related to SMEs and households. The EACB have also suggested to exclude SMEs exposures from the GAR until the review foreseen in DDA art. 10 and consistency with CSRD can be ensured.
Since the taxonomy technical screening criteria (TSC) will evolve over time, it is important that financial instruments which are Taxonomy-aligned at issuance don’t lose their status when the TSC are adapted -especially considering the long maturity of certain portfolio holdings and lending. However FU should have the opportunity to reassess the GAR when assets reach Taxonomy-alignment during the lifespan of the financial operation.
Concerning the stock of loans, we ask to specify in DDA art. 9(3) that 2023 is the cut off date for credit institutions (CI) to start building up the required five years reporting periods in the KPIs. There should be no retroactive application. Only financings granted from the application date of Taxonomy disclosure can be considered.
Complete alignment of GAR disclosure under Art 8 Taxonomy and the EBA ITS shall be ensured. Given that the templates have different formats currently, we fear that this could lead to a parallel disclosure that would undermine transparency, confuse investors while adding complexity and inefficiency.
You will find more information in the document attached and the EACB’s official answer to the consultation at the following link.
For further details or questions please contact:
Ms. Elisa Bevilacqua, Head of Department (firstname.lastname@example.org)
Mr. Giovanni Betti, Adviser Sustainable Finance (email@example.com)