07 June 2021

BDB: GBIC comments on the requirements of Article 8 of the TaxonomyRegulation

The requirements of the Delegated Act are very extensive and appear to be too complex and impracticable, including in light of the level of detail. We welcome the transitional periods provided for by the European Commission, but see further scope for supporting the efficient implementation of the Taxonomy Regulation.

General comments

The German Banking Industry Committee (GBIC) welcomes the opportunity provided by the European Commission to comment on the draft Delegated Act (DA) published on 7 May 2021 specifying the requirements of Article 8 of the Taxonomy Regulation (Regulation (EU) 2020/852).

The requirements of the Delegated Act are very extensive and appear to be too complex and impracticable, including in light of the level of detail.

We welcome the transitional periods provided for by the European Commission, but see further scope for supporting the efficient implementation of the Taxonomy Regulation (see our positions below on the timing of application).

The European Commission announced the green asset ratio (GAR) as a simple KPI for ESG in 2019. In its current version, however, the level of detail of the information required is very high, to the extent that we can no longer talk of a simple KPI. The level of detail of the information requested is not appropriate and presents all institutions, especially those institutions that will newly fall within the scope of the reporting obligations under the CSRD, with major challenges in terms of personnel, methodologies and data technology.

In addition, the GAR has hardly been publicly discussed so far. There has not been an opportunity to review the GAR in terms of its intended application and design until the present publication of the Delegated Act on Article 8 of the Taxonomy Regulation and the consultation paper on disclosing ESG risks published by the European Banking Authority (EBA) on 1 March 2021. The technical criteria and thresholds for environmental objectives 1–2 of the taxonomy on which the GAR is based only recently become available for the first time in the shape of the Delegated Act published by the European Commission on 21 April 2021. Accordingly, the remarks in our comments are extensive (see Annex).

GBIC considers the following points to be essential:
• Harmonisation with other legislative proposals: GBIC is voting to report the GAR exclusively under the DA and to delete the corresponding, almost identical templates for Pillar 3 disclosures under the CRR. In addition, it is necessary to harmonise the Delegated Act with the (new) CSRD in terms of the challenges relating to timing and reporting.
• Existing business/new business: The existing business entered into at least until December 31, 2021 should not have to be included in the calculation of the KPIs on a permanent basis, but only the future new business thereafter. An optional discretion should be granted for this.
• Thresholds for taxonomy checks: GBIC supports optional thresholds for taxonomy checks for individual transactions as well as for portfolios.
• Comparability: It should be clarified to what extent and for how long industry-specific estimates and the use of proxies are possible. We also advocate splitting the GAR into two KPIs to ensure comparability: a GAR 1 (full taxonomy compliance/alignment) and a GAR 2 (substantial contribution only).
• Suggestions for reducing the complexity of disclosure templates: The level of detail of the information requested from the credit institutions does not appear to be appropriate

Timing of application/transitional periods: GBIC is in favour of harmonising the timing of Article 11(3) with the initial application of the CSRD, i.e. for the 2023 reporting period.
• Undertakings not subject to an obligation to publish non-financial information pursuant to Article 19a or 29a of Directive 2013/34/EU: GBIC is in favour of allowing optional inclusion (“voluntary may”) in the numerator starting in the first KPI reporting period.
• Retail exposures related to immovable property for stock: GBIC is in favour of allowing optional inclusion starting in the first KPI reporting period and wish to request an optional threshold for the DNSH test for retail exposures beyond the transitional period (2024).....

more at BDB

© BDB - Bundesverband Deutscher Banken