Response to the TEG Taxonomy Technical Report

FESE supports the ongoing work of the Technical Experts Group (TEG) and the useful expertise they are providing to regulators. We welcome the endeavour to base the technical screening criteria on conclusive scientific evidence and the inclusiveness of this process.

It is important to ensure that all capital market raising activities adhere to sustainable financing so all companies can be part of the necessary transition towards a sustainable future for our planet. We support the creation of a taxonomy as this will favour both comparability and transparency by providing clarity on the activities that can be considered sustainable and, based on this, facilitate the determination of the degree to which assets are sustainable.

Defining sustainable activities as opposed to basing the assessment on types of companies or assets is important as it will enable a differentiation based on activities carried out by companies and will not favour any asset class over another. Activities should include planned activities and respective achievements linked to those planned activities. The taxonomy should be applied only to financial products labelled or marketed as sustainable and to financial market participants offering these products.

FESE considers that companies should provide the information required for financial intermediaries to make assessments and decisions but should not themselves be required to make these assessments. We support the overall objective to strengthen sustainability-related disclosures by investee companies but not extending the scope of the taxonomy to issuers.

However, we are concerned that the TEG did not refer to the advantages of privately held companies reporting on green equity investments. We share the TEG’s assessment that for the taxonomy to be successfully implemented by financial firms, all companies must begin to provide transparency in their economic activities. Both listed and non-listed companies should be encouraged to voluntarily disclose their business activities and how they align with the Taxonomy.