Sustainable Finance Observatory
SF-Observatory
Sustainable Finance Observatory is an internationally recognised think tank focusing on mobilizing private financing for the transition.
ID: 913993896698-65
Lobbying Activity
Response to Taxonomy Delegated Acts – amendments to make reporting simpler and more cost-effective for companies
24 Mar 2025
The Commissions initial announcements accompanying the omnibus package promised to achieve simplification without compromising the ambition in the European Green Deal. We are concerned that the Commissions failure to adhere to its own Better Regulation Guidelines has led to a draft taxonomy act which critically damages the integrity of the sustainable finance framework and its ability to help reorient finance in support of the Green Deal. The Sustainable Finance Observatory (formerly 2° Investing Initiative) recognises the need to simplify the sustainable finance framework. We support initiatives to review legislation, remove duplication or redundant data requirements, assist with ease of reporting, and enhance usability of sustainability information. But the draft taxonomy act does not reflect any of these aspects we would expect for a simplification drive. Instead, it seems rushed and symptomatic of an ideological approach that has not followed procedural norms for policy making. We are concerned that the Commissions activities in relation to this draft taxonomy act (as part of the broader omnibus package) do not comply with the Better Regulation Guidelines. These emphasise the need for evidence-informed policymaking, a strong approach to stakeholder consultation, burden reduction and analysis of key impacts, and integration of strategic foresight. In particular: - The Guidelines require an impact assessment for initiatives that are likely to have significant economic, environmental or social impacts or which entail significant spending, and where the Commission has a choice of policy options. Both criteria are satisfied in the context of the omnibus package, yet evidence of any impact assessment in SWD(2025)80 accompanying the omnibus package is scant. What analysis there is appears primarily based on an assessment of cost savings with zero analysis of how the proposals may undermine achieving the Green Deal objectives. - The Guidelines require stakeholder consultation where relations with stakeholders should be governed by four principles: participation, openness and accountability, effectiveness and coherence. We question whether the stakeholder consultation which the Commission conducted prior to publishing the omnibus package complies with these principles. Indeed, the non-public and non-transparent closed doors consultation hosted by the Commission in early February prior to publication seems an egregious example of non-compliance. These examples raise significant concerns about if the proposal should be considered evidence-informed, with the requisite analysis of key impacts and the integration of strategic foresight as required by the Better Regulation Guidelines. On the content we consider that the draft taxonomy act does not contribute to a simplification objective and is not an adequate response to the many stakeholders from inside and outside the finance sector that have requested clarification on key aspects to improve reporting quality and completeness. The introduction of the de minimis requirement (together with other proposals in the omnibus package) simply creates a gap in data coverage - but there is no analysis of the implications of what this gap means for achieving the Green Deal objectives. There is no analysis of the section of the economy which is excluded from the requirement to provide data or how important this section of the economy is for achieving the Green Deal objectives. In the context of the critical need to reorient capital flows into sustainable investment and to monitor these capital flows to assess progress towards the Green Deal objectives, the Commission should provide - and the Parliament should demand - better justification for the proposed amendments in the draft taxonomy act. The Sustainable Finance Observatory has provided proposals to simplify the taxonomy (available on our website) while unlocking its potential as a tool for transforming the European economy.
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