As mentioned in our position paper “For a truly sustainable finance – that combats climate change and inequality”, we welcome the steps undertaken by the EU to adopt a clear and common definition of what sustainable and social finance is.
On the other side, given the massive lobbying efforts by mainstream banking and industry groups, we are now facing the risk of a too diluted approach. This could lead to social and green washing practices being labelled as “sustainable” by the EU taxonomy, while on the other hand this approach would not foster the financing of activities with a real social added value.
In our proposal and in the answer submitted to the EU consultation on the draft report on the social taxonomy we highlight therefore the need to clearly include the social economy sector in the taxonomy.
In addition, Social Economy principles should be used to determine the ratings of companies via a “best of class” approach, rather than using just a “Do No Significant Harm” principle.
In general, we highlight the need to foster the assessment of the investments’ benefits for the people and the planet, including both social and environmental issues – one of the core principles of Ethical Finance.
Overall, the aim of the social taxonomy should be to develop a transparent system to identify those organisations who go the extra mile with regard to social and environmental criteria, including the focus on the real economy, and to filter out green/social washing free riders.
In order to do so, it is essential to ensure coherence of all the activities of the organisations, and not just the sustainability of a single product. This would mean to include additional negative criteria to exclude companies using tax heavens and/or incurring in highly damaging practices for the environment.
Finally, the ultimate purpose of the taxonomy is to facilitate the mobilisation of citizens savings that can help finance the ecological transition and projects with added social value. To reach this goal, the social taxonomy should promote transparency and clear communication on what is social and sustainable finance towards consumers.
Read the FEBEA position on social taxonomySocial_Taxonomy-FEBEA_new