The pressure on European companies is accelerating to integrate the ESG dimension into their strategy and business models. At the same time, banks are also more and more required to deliver green, sustainable and taxonomy-aligned loans.
The "Taxonomy" regulation was adopted in June 2020 by the European Union to finance sustainable growth. The objectives are twofold:
- drive companies to identify assets in their portfolio that meet specific technical criteria and indicate the share these represent in their overall business.
- direct credit institutions, insurance companies and investment funds to show the share of sustainable assets financed.
The framework for the new sustainability reporting will be completed by June 2022 by the new banking directives for the more stringent classification of products with the "GREEN" label and the revision of capital ratios, the promulgation of the ESRS sustainability accounting standards and the European Directive on Corporate Sustainability Reporting (CSRD. The CSRD will have to be transposed into national law in every EU country. In the current state of discussions, the CSRD is now likely to enter into force definitively no earlier than 1 January 2025, thus applying to the publication of financial statements as at 31 December 2024. Gradual implementation could also be envisaged, depending on the entities concerned.
These various pressures may result in SMEs suffering from a financing shortfall due to a lack of human and financial resources required to report on sustainability, yet financing is a key prerequisite for SMEs to green their business models.
This vicious circle can only be broken by a reflection at European level on how to effectively finance these changes in strategy, in order not to put business out of business. Given that banks are the main source of funding for SMEs, their support is key to finance this transition for direct business benefit.
Event: Sustainability webinar - Impacts of taxonomy and bank loans on SMEs
Date: 5 April 2022
Time: 11 to 12.30 CET