The taxonomy debate is part of the European Commission’s Sustainable Finance Action Plan, which shapes the ground rules for the European financial sector to contribute as much as possible to sustainability.

“The action plan’s objectives recognize the notion that all finance has an impact, and that it will require all financial market participants’ involvement to get to those objectives”, according to a letter from the Secretary General of the European Federation of Ethical and Alternative Banks and Financiers (FEBEA) and Executive Director of the Global Alliance on Banking on Values (GABV) to the Finnish presidency. Triodos Bank is a member of the GABV.

Major concern

“But we have a major concern relating to the taxonomy debate and its scope of application which ironically runs the risk becoming a barrier rather than an enabler of sustainable finance. In essence, by loading requirements only on to those market participants who are making efforts in sustainability, the EU would avoid disclosure where it is needed most – namely in activities which are not sustainable. In effect, there could be a disincentive to move towards sustainable finance at a time where Europe needs it most.”

The FEBEA and GABVcall on the Finnish presidency to take decisions that genuinely reflect the original objectives of the sustainable financial action plan: reorienting capital flows towards sustainability, integrating sustainability in risk management, and fostering a culture of transparency and long-termism.