Apex Group, a global financial services provider with a leading ESG practice, has launched an EU Taxonomy solution to guide clients through the alignment process with SFDR and NFRD.
- Apex is aiding its hundreds of ESG customers to align with the classification system of the EU Taxonomy to prove financial flows have sustainable credentials.
- Regulations and reporting requirements are linked and so it provides a foundational discipline.
- The EU Taxonomy has been undergoing changes with the allowal of nuclear and natural gas approved in the system, a controversial amendment. Further changes may come.
Apex Group, a global financial services provider, has launched an EU Taxonomy Solution as part of its ESG unit to help clients align with EU Taxonomy guidelines that are linked to Sustainable Finance Disclosure Regulation (“SFDR”) Article 9.
It also applies to companies in scope of the EU Non-Financial Reporting Directive (“NFRD”) of which there are about 2,000, The objective of the NFRD is to improve the quality and quantity of corporate non-financial information reporting.
The EU Taxonomy came out of the Commission’s action plan on financing sustainable growth, to provide goal posts to channel capital flows. “The establishment of a unified classification system for sustainable activities is the most important and urgent action envisaged by the action plan.”
In order to qualify as sustainable finance, the EU has classified six broad environmental objectives that economic activity should contribute to and certainly do no harm to:
- climate change mitigation,
- climate change adaptation,
- sustainable use and protection of water and marine resources,
- transition to a circular economy,
- pollution prevention and control,
- protection and restoration of biodiversity and ecosystems
Many investors position themselves as aligning with SFDR regulation which has required disclosures that contribute to climate change mitigation and adaption under the EU Taxonomy since 2022. From 2023, this will be extended to disclosures on contributions to water protection, the circular economy, pollution prevention, and biodiversity and ecosystems too.
Joshua Brunert, Global Head of ESG Product at Apex Group said: “We believe that the EU Taxonomy is going to be the key framework for reallocating capital towards sustainable activities in the coming years. It is a major enabler of sustainable investment, helping companies and investors to prove their ESG credentials, stand out from competitors, and drive positive change.
“Enabling our in-scope clients to demonstrate alignment with the EU Taxonomy is only the beginning – with over twenty green taxonomies in place, in development or under discussion worldwide it is crucial that investors act to understand and report taxonomy alignment data sooner, rather than later.”
Apex’s solution sets out a five-step process around assessment, data collection and calculating and reporting eligibility.
Over 350 GPs or private equity firms in over 45 countries are using Apex Group’s ESG services, to report on their investments in-line with ESG standards and regulations.
The watering down of the EU Taxonomy
Following the energy crisis caused by Russia’s invasion of Ukraine, the EU felt compelled to allow new nuclear and natural gas into the taxonomy to qualify as sustainable for finance purposes, which prompted cries of greenwash. They were described by the Commission as transitional activities and will be allowed in the taxonomy until 2030.