KBN feedback on EU taxonomy
KBN welcomes the Taxonomy as a tool to define and promote sustainable activities. That said, we have a few concerns.
On 22 November The European Commission launched a public consultation on the first two sets of criteria for determining which economic activities can qualify as environmentally sustainable, under the EU's Taxonomy. The taxonomy will help create the world's first-ever classification system for sustainable economic activities – that will create a common language that investors and businesses can use when investing in projects and economic activities that have a substantial positive impact on the climate and the environment.
KBN has responded to the hearing through several channels. Together with two of our sister organizations, Swedish Kommuninvest and Finnish MuniFin, KBN has prepared the positions on which KBN's own consultation response is based. The same banks have also contributed to our European umbrella organization EAPB (European Association of Public Banks)'s consultation response. KBN has also sent a separate consultation paper to the Ministry of Finance.
Head of Green Finance at KBN, Torunn Brånå represented the bank in the Nordic working group that has drafted the consultation response to the European Commission.
- We support the intention behind the classification system for sustainable economic activity, but are concerned that the system will entail administrative burdens that will make the standards demanding to use in a Norwegian context, and that in this way there is a risk of restricting the ecosystem for sustainable finance rather than strengthening it. In that case, it would be contrary to the intention behind the EU's action plan for sustainable finance, says Brånå.
KBN believes that the Norwegian authorities should work to ensure that the principle of proportionality is implemented at EU level in a way that appears appropriate based on Norwegian business- and municipal structure.
- Both the criteria themselves and the documentation required to document compliance should be simplified if it is to be practically possible to use this. We also believe that the risk assessments under DNSH (do no significant harm) should have been designed as prudence principles and to a lesser extent as specific criteria. In all cases, the principle of proportionality in terms of company size, investment size, risk profile, etc. should prevail, in accordance with established risk management practices. This would support the aims of the DA, namely to “ensure usability and proportionality” and being “easy for economic operators and investors to use”, Brånå concludes.