The burden of compliance
One of the primary issues raised in the report is the excessive burden placed on companies to demonstrate compliance.
The ‘Do No Significant Harm’ (DNSH) principle, a core aspect of the Taxonomy, has been flagged as particularly cumbersome.
Assessing whether an activity meets DNSH criteria is highly complex, with requirements often difficult to verify retrospectively.
As the report notes, only 3% of the criteria are quantitative and linked to a standard, making consistent data collection a challenge.
Financial institutions, too, have struggled with the Green Asset Ratio (GAR) and Green Investment Ratio (GIR), which aim to quantify the proportion of sustainable investments in a firm’s portfolio.
The Platform’s findings suggest these metrics are not functioning as intended, with significant inconsistencies in reporting.
“The GAR is the main Taxonomy-related disclosure KPI for credit institutions, but the way it is reported today means it is not comparable or functioning as designed,” the report states.
Read More: Why the Finance Sector Wants to Simplify the EU Taxonomy
