This response exposes two critical flaws in the EU Taxonomys application to mortgages and renovation loans: 75% of banks green asset ratios consist of mortgages associated with already highly energy efficient properties; while only loans for renovations only represent 0,05%. This makes green asset ratios a highly unreliable indicator of a bank's sustainability efforts. We propose a modular, proportional framework for Activity 7.2 and recommend revising or removing Activity 7.7 to refocus the Taxonomy framework on genuine sustainability improvements via renovations, and not mere real estate transactions or ownership.
The Commission's efforts to simplify the reporting framework are welcome, however the reduction of the scope of entities required to report under CSRD are disproportionate, and so is the 10% new materiality threshold. Beyond these points, this input provides very practical suggestions to further improve the Annex 6 for credit institutions. These recommendations are based upon extensive work of analyzing the first reporting cycle of Taxonomy alignment for a sample of 73 EU banks representing over 80% of Eurozone banking assets. When revising these templates, it is important that the EU Commission bears in mind that rich and robust data stemming from the EU Taxonomy should eventually enable strong research on the green financial flows, in order to guide the work of future policy-makers in the field of climate, energy and financial policy. As such, the usability improvements of the disclosure framework should not only benefit investors and market participants but also for researchers and policymakers.