EFAMA: ​EU Taxonomy at risk of hampering green housing investments


As the voice of the European asset management industry, EFAMA strongly welcomes the development of the EU Taxonomy and its proposed technical screening criteria in the Delegated Acts. EFAMA sees the Taxonomy as a critical tool to unleash the potential of sustainable finance in Europe by assisting issuers, project promoters, companies, investors, and other financial market participants in identifying truly sustainable economic activities.

The Delegated Acts will make the EU Taxonomy operational by determining which investments substantially contribute to climate change mitigation and adaptation, while avoiding harm to other environmental or social objectives. The technical screening criteria will be fundamental in guiding investment decisions of financial market participants and, increasingly so, public authorities. Moreover, given the scale of the EU internal market, the Taxonomy is likely to have an impact also in non-EU jurisdictions.

​To that effect, EFAMA voices a few key concerns regarding the current proposal for the Delegated Acts by the European Commission:  

  • For the Taxonomy to have a positive impact on cost reduction for sustainable housing and green real estate development, the proposed criteria for construction, renovation and ownership of buildings need to be revised. The current proposal would be detrimental to the decarbonization of EU´s building stock by restricting the issuance of Taxonomy aligned green bond volumes. The stringency and lack of economic viability of the criteria would be particularly counterproductive for the covered bond and green mortgage bond markets.


  • Taxonomy alignment at the time of issuance of the financial product or instrument should apply for the product’s entire duration, or for a sufficient period of time to mitigate concerns over future technical screening criteria non-alignment. The current proposal foresees a well-intentioned, science-based review of technical screening criteria every three years, which could lead to concerns by investors over the future Taxonomy alignment of financial products with longer timeframes of the underlying investment projects.
  • Due to the ESG data challenge, the current timeline for application of Taxonomy disclosures continues to pose a serious challenge. We recommend readjusting the disclosure timelines to ensure a more practical and seamless sequencing between the reporting done by companies and asset managers. As users of disclosure information, asset managers must be able to rely on reliable and comparable company disclosures.  We are concerned that most companies will not be ready to implement the new disclosure requirements o​n 1 January 2022, leaving financial market participants with no option but to rely on estimates and third party screenings. In this context, we also call on the European Commission to clarify the conditions under which market participants can rely on due diligence screening produced in-house and acquired from external data providers.

  • In order to address the problem of insufficient availability of meaningful, reliable, comparable, and public ESG data, we suggest that the European Commission focuses on the following points: prioritising the revision of and extend the scope of non-financial reporting (NFRD), developing European reporting standards, supporting greater reliance on third party verification and advancing the European Single Access Point.
Given the globalized nature of financial markets, EFAMA also suggests increasing the international relevance of the EU Taxonomy ​and leading a conducive dialogue with jurisdictions showing interest in sustainable finance policies. The role of the International Platform on Sustainable Finance could be key in this respect.

The full public consultation response of EFAMA can be found here

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