The EU Taxonomy and Fixed Income markets

What are the tangible effects unleashed by the EU Taxonomy so far? Have real changes occurred?

That was the question discussed by Arthur Campredon from the French Treasury, Laurene Chenevat from Mirova and Isabelle Lambert from SPIE at a panel moderated by Cédric Merle from Natixis CIB’s Green & Sustainable Hub at the Environmental Finance conference held in London on 28 April 2022.

Cédric Merle, Head of GSH Center of Expertise & Innovation, Natixis CIB

The panelists acknowledged that the implementation phase is well underway and taxonomy awareness is henceforth widespread among market participants. Arthur Campredon from the Director General Office of the French Treasury recalled that the taxonomy and its adoption was a revolution creating an entire ecosystem made of labels and standards.

Nonetheless, usability challenges linger. This holds true especially for investors who crave for investees’ firsthand eligibility and alignment data that would be more accurate and reliable than estimates from third parties.  

First movers such as SPIE which reported alignment data before mandatory deadlines has certainly generated interest from analysts and investors. The taxonomy is no longer the sole remit of public affairs departments as its criteria and mechanics are part of daily organizational routines. The classification criteria are being used by a wide range of actors, including operational teams.

Isabelle Lambert pinpointed that at SPIE, “the taxonomy has structured the conversation between top management, operational management and support functions such as finance and business development around what is green and what isn’t”. It is being used to consolidate the contribution of the firm’s various activities to the fight against climate change. It helps harmonizing how impacts are communicated to clients and asset owners.

Prepared businesses can expand usage of the taxonomy from a reporting scheme to a steering tool. Isabelle Lambert evoked SPIE’s target to reach 50% of Taxonomy-aligned revenues on climate mitigation by 2025. To reach that target, Directors of Business Units have clear mid-term objectives linked to this.

Laurène Chenevat explained that at Mirova, the taxonomy criteria are being used to benchmark their proprietary methodologies.  In some instances, the asset manager’s approach as proven more demanding than the EU taxonomy. All Mirova’s products are classified as article 9 under SFDR, and therefore have to provide information and estimates on taxonomy alignment sooner than other products, especially in prospectus documentation.

Two particular challenges to greater usability of the taxonomy highlighted by panelists were how to demonstrate respect for the DNSH (do no significant harm) and minimum social safeguards criteria. Isabelle Lambert explained that at SPIE, significant contribution is assessed at project level, while DNSH and social safeguards fulfillment are demonstrated at Business Unit level. At Mirova, DNSH and minimum social safeguards criteria are associated with ESG risks management, so it is a proxy approach based on a prudent analysis.

Laurène Chenevat pinpointed that data providers are important because the bulk of companies does not report yet, imposing to use proxies and estimates, that significantly varies from one provider to another
(0 to 10%).

Future updates and adjustments of the taxonomy remain a highly debated topic, and the panel zoomed in on a few key underlying points. Finally, the panel discussed the biggest outstanding question, around the binary nature of the taxonomy under which activities are either deemed sustainable or not. This differs from some proprietary methodologies such as Natixis CIB’s Green Weighting Factor which includes seven levels from dark green to dark brown. A more nuanced approach for the taxonomy has been widely advocated, and appears to be emerging as a consensus among stakeholders, potentially through the development of an Extended Taxonomy. This is the sense of the proposal from the Sustainable Finance Platform, which suggests red and amber level of performances.


To discover Natixis Green & Sustainable Hub research on Taxonomies, visit our Center of Expertise & Innovation webpage. Stay tuned, the study “Extended Taxonomy: in-betweenness and elitism softening” will be released in May.

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