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EFAMA feedback on draft Delegated Act of Taxonomy Regulation for climate change mitigation and adaptation

Sustainable Finance
17 December 2020 | Policy position
Sustainable Finance
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As the voice of European asset management industry, EFAMA strongly welcomes the development of 
the EU Taxonomy and its technical screening criteria. We see the Taxonomy as a critical tool to 
unleashing the potential of sustainable finance in Europe by assisting issuers, project promoters, 
companies, investors, and other financial market participants in identifying truly sustainable economic 
activities. We wish to put forward recommendations that aim to improve the usability and integrity of this 

The Delegated Act (DA) will make the EU Taxonomy operational by determining which investments make 
substantial contribution to climate change mitigation and adaptation, whilst avoiding harm to other 
environmental or social objectives. Its proposed technical screening criteria (TSC) will be fundamental in 
guiding investment decisions of financial market participants and, increasingly so, public authorities. 
Moreover, given the scale of the EU internal market, the Taxonomy is likely to have a reach also in non EU jurisdictions.
We would like to share asset managers’ feedback on the challenges in making the Taxonomy work in 
practice. This position paper offers 26 policy recommendations towards the technical screening and “do 
no significant harm” (DNSH) criteria; implementation difficulties related to timeframes, investment plans 
and financial products, as well as challenges related to the availability of ESG data. 


1. We are concerned that the proposed criteria for construction, renovation and ownership of buildings 
would be detrimental to the decarbonization of EU´s building stock by restricting the issuance of 
Taxonomy aligned green bond volumes. The stringency and reduced economic viability of the criteria 
would be particularly counterproductive for the covered bond and green mortgage bond markets. As 
a result, the potential of the Taxonomy to lower the costs of sustainable housing and real estate 
development would be significantly reduced. Furthermore, the linkage of TSC for “building 
acquisition and ownership” to Energy Performance Certificates could, due to their different absolute 
energy thresholds in Member States, create an unlevel playing field in the EU internal market for 
green bond issuance. 

2. The science-based review of the TSC every three years could lead to concerns over the future 
Taxonomy alignment of financial products where underlying investment projects have longer 
timeframes. Therefore, Taxonomy alignment at the time of issuance of the financial product or 
instrument should apply for the products´ entire duration, or for a sufficient period of time to mitigate 
concerns over future TSC non-alignment.

3. Given the ESG data challenge, the current timeline for application of Taxonomy disclosures 
continues to pose a serious challenge. We recommend readjusting the disclosure timelines to ensure 
a more practical and seamless sequencing between the reporting done by companies and asset 
managers. As users of these information, asset managers must be able to rely on reliable and 
comparable company disclosures. We are concerned that most companies will not be ready to 
implement the new disclosure requirements by January 1st 2022, leaving financial market participants 
with no option but to rely on estimates and third party screenings. In this context, we also call on the 3 / 10
European Commission to clarify the conditions under which market participants can rely on due 
diligence screening produced in-house or acquired from external data providers.

4. Prioritising the revision of NFRD to extend its scope, the development of EU reporting standards, 
greater reliance on third party verification and the establishment of the European Single Access Point 
could address the problems related to the insufficient availability of meaningful, reliable, comparable, 
and public ESG data. 

5. Given the globalized character of financial markets, we suggest increasing the international 
relevance of the EU Taxonomy to the extent possible and leading a conducive dialogue with 
jurisdictions showing interest in sustainable finance policies. The role of the International Platform 
on Sustainable Finance is key in this respect.

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