Inception Impact Assessment
Commission Delegated Regulation on Taxonomy-related disclosures by undertakings reporting non-financial information.
The Confederation of Finnish Industries EK’s contribution to the European Commission’s Roadmap
The EK welcomes the general aim of EU Taxonomy which is to help undertakings, financial intermediaries and investors to allocate capital flows towards environmentally sustainable projects and activities. Making capital better available for sustainable activities is essential to achieve the EU climate targets.
Ambitious initiatives that aim at establishing a new regulatory framework for reporting obligations as well as other initiatives directly and indirectly affecting companies must be assessed with caution. An appropriate assessment of impacts foreseen to accompany this initiative is highly welcomed by EK. We hope that the Commission considers the following points when developing the delegated acts specifying the technical and detailed requirements for entities subject to the Non-Financial Reporting Directive (NFRD) to publish information on how and to what extent their activities are associated with the EU Taxonomy.
Since the European companies are still facing economic hardships caused by the COVID-19 crisis it is of the essence that an adequate time is granted for companies to transfer their reporting and management processes to be Taxonomy compliant.
The desired regulatory framework should be practical, proportional and fit for purpose for businesses of all size in order to facilitate the transition towards carbon-neutral economy. Developing of new reporting requirements risks leading to overlapping requirements, causing extra burdens for companies and confusion for stakeholders. Thus, streamlining the various obligations should lead to simplification and clarification.
Avoiding disproportionate burdens especially for SMEs is very important since the Taxonomy regulation contains several changes affecting the scope of reporting obligations for users. It is essential to strike the balance between information expectations on the investor side and the businesses’ need to maintain lean processes that do not hinder but encourage market-led innovation processes within companies.
The EK supports the developing the Taxonomy framework building on existing reporting initiatives, keeping up the international role for reporting standards and ensuring legislative consistency and avoiding duplication of reporting legislation.
We do not support so called ‘brown-listing’ of economic activities since such approach would most likely be counterproductive by negatively labelling companies as ‘brown’. The development of such a separate and exhaustive list would significantly increase the complexity of an already complex sustainable finance framework and result in potential confusion, with counterproductive effects. The Taxonomy for environmentally sustainable activities and ’Do No Significant Harm’ (DNSH) criteria will de facto fulfil their purpose without ‘brown-listing’.
The Taxonomy should remain a positive, enabling, non-punitive framework which helps companies to invest sufficiently in order to achieve the goal of carbon-neutral economy on time.