UNEP FI and the European Banking Federation (EBF) have launched a unique report assessing the extent to which the EU Taxonomy on Sustainable Activities could be applied to core banking products for labelling or disclosure purposes. This report is the result of a project with 26 major banks, seven banking associations and five observing organisations working together to test, pilot and assess the complexities of applying the EU Taxonomy, which is aimed mainly at investors, to core banking products.
From March to August 2020, banks participating in the project tested the EU Taxonomy on more than 40 live or recently closed transactions and existing client relationships, across a large spectrum of sectors and economic activities, and a diverse set of banking products, clients’ corporate structures and geographical locations providing unique insight and information value.
The objective of “Testing the application of the EU Taxonomy to core banking products: High-level recommendations” was to develop an initial understanding of the application of the EU Taxonomy to banking products and propose a set of recommendations to enhance applicability and address the identified practical and conceptual challenges. It shares key insights from the information collected, including case studies and subsequent discussions between participating banks, focusing on the benefits and challenges experienced by banks whilst also proposing high-level principles to follow in order to apply the EU Taxonomy to retail banking, SME lending and corporate banking, including trade, export and project finance. 26 of the case studies, covering a representative sample of various banking products, are available in the published report.
The testing exercise also led to eight recommendations directed to legislators, regulators, owners of environmental and social standards and frameworks, labels and certification schemes used by banks to address the identified challenges, and to the banks themselves. UNEP FI and the EBF trust that this report will foster further discussions and facilitate the implementation of the EU Taxonomy in the banking sector.
Access the full report here.