Business urges EU to make green taxonomy voluntary
Companies including DHL, Engie and Siemens are calling on European policymakers to make the bloc’s green taxonomy voluntary.
The European Commission yesterday closed a consultation on its proposals to streamline the regulation as part of its ‘omnibus’ package, but many respondents said the plans don’t go far enough.
The French Association of Large Companies, AFEP, said its members think the framework “should be made voluntary for all undertakings, taking into account that costs of compliance with the Taxonomy significantly outweigh the benefits”.
Likewise, the American Chamber of Commerce to the EU suggested adopting “measures like voluntary reporting or delaying additional reporting until benefits are demonstrable”.
French utility Engie argued that the information it discloses under the Corporate Sustainability Reporting Directive “already provides detailed sustainability information to its stakeholders”.
Germany’s Siemens Energy said the taxonomy “should be suspended until a more user-friendly principles-based approach will be enforced”.
“If the European Commission decides to stick to today’s highly prescriptive approach, we recommend considering to make the reporting requirements voluntary,” it added.
The Commission’s proposals include a plan to allow companies to omit information about green operational expenditure (OpEx) if their taxonomy-eligible turnover is less than 25%.
But BMW wants the OpEx requirement axed, arguing that, while capital expenditures indicate whether a company is investing in becoming greener, OpEx reporting only provides backward-looking data.
“We very much doubt therefore that the OpEx KPI provides investors with relevant information,” the carmaker wrote.
Engie expressed regret that the “burdensome” requirement had “not been removed entirely”.
German business association Deutsches Aktieninstitut echoed a recommendation made by the Commission’s advisory body, the Platform on Sustainable Finance, saying OpEx disclosures should be voluntary unless they relate to spending on research and development.
German logistics giant DHL made the same request.
Materiality thresholds
To reduce the disclosure requirements further, the Commission wants to introduce materiality thresholds into the regulation, so that companies don’t have to report on insignificant parts of their business.
But BMW claimed it could only determine whether its activities exceeded the proposed 10% threshold at the end of each financial year, meaning the “burden to collect, calculate and assess the data remains unchanged”.
Deutsches Aktieninstitut called for a “general materiality principle” that would give companies the discretion to decide their own thresholds, in line with the approach taken by the International Financial Reporting Standards Foundation.
Schneider Electric warned that, if the 10% threshold was retained indefinitely, it would make it “harder to compare disclosures”.
It called for it to be removed once the taxonomy framework is fully developed to cover all sectors.
Do No Significant Harm
The taxonomy’s Do No Significant Harm (DNSH) criteria also came under fire from companies in the consultation.
DNSH seeks to filter out business activities that support one green objective while undermining others, but companies said the rules should be harmonised with relevant EU laws.
For example, Germany’s chemicals association VCI insisted that complying with existing regulation on pollution prevention and control “should already be considered as not doing significant harm”.
Airbus said “compliance with substances-related regulation already ensures a level of sustainability/environment protection that does not need to be duplicated and a fortiori expanded as a DNSH criteria, especially considering the simplification exercise that is being carried out at European level”.
The Commission plans to finalise the changes to the taxonomy rules by the end of the year.