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.