The ABBL position on the EU Taxonomy delegated acts

Key messages from the ABBL

1) Reform “Do No Significant Harm” (DNSH)

Do No Significant Harm (DNSH) is intended to ensure that an activity contributing to one environmental objective does not significantly harm others.

In practice, DNSH can become a complex, process-driven hurdle. Where data are missing or disclosure is incomplete, activities may be treated as non-aligned even when the underlying activity supports sustainability objectives.

The ABBL calls for a reform that makes DNSH:

• simpler and evidence-based
• auditable and binary in application
• more consistent with the wider EU sustainable finance framework, including the evolving approach under the Sustainable Finance Disclosure Regulation (SFDR)

The ABBL also highlights the need for pragmatism in retail lending. In particular, banks should not be expected to verify highly granular DNSH criteria for residential mortgages and vehicle loans when the necessary documentation is not accessible in a standardised way.

2) Exempt Minimum Safeguards due diligence for EU firms

The Taxonomy Regulation includes Minimum Safeguards, which relate to core social and governance protections.

For exposures to EU-established undertakings, many of these protections already stem from binding EU and national legislation. Additional due diligence by financial institutions can therefore duplicate checks without increasing protection.

The ABBL recommends that EU companies should be deemed automatically compliant with Minimum Safeguards. This would reduce operational complexity and strengthen consistency across the EU sustainable finance framework.

3) Harmonise ESG data rules across the framework

Environmental, social and governance (ESG) information is central to sustainable finance reporting and disclosures.

A recurring challenge is the volume and granularity of required indicators, combined with limited availability of robust data. This increases costs for institutions and corporates, often requiring dedicated internal resources or reliance on external data providers.

The ABBL supports a more workable approach to ESG data, including:

• reducing mandatory indicators to the most decision-useful metrics
• harmonising data rules across EU legislative texts
• allowing documented estimates and proxies where appropriate
• extending the validity of collected ESG data to three years

4) Align reporting requirements and apply proportionality

The sustainable finance reporting landscape remains fragmented. Overlaps can lead to duplication, confusion and workload without improving clarity for stakeholders.

A concrete example is the Green Asset Ratio (GAR), which is disclosed under both the EU Taxonomy framework and prudential reporting requirements under Pillar III.

The ABBL advocates for:

• fewer indicators, focused on decision-useful information
• removal of duplicative requirements, including around GAR reporting where possible
• proportionality that reflects institutional size and classification, for example Significant Institutions and Less Significant Institutions