EU Taxonomy: Preserving ambition, facilitating application in the real estate industry

Observation:
Even if the Taxonomy criteria for renovation are fully met, but the building does not achieve a high level of energy efficiency after the renovation, only part of the loan and not all of the financing of the building can be considered taxonomy-compliant. This provides a clear incentive to prioritize buildings that are already relatively energy-efficient and need only a small improvement to become taxonomy-compliant.

Solution:
Criteria are needed to encourage the renovation of buildings that are currently classified as inefficient (energy classes D-G) and where renovation may not immediately lead to the highest energy class. Under the defined requirements for energy-efficient renovations, the entire real estate financing should be considered taxonomy-compliant for the economic activity. "renovation of existing buildings" if certain conditions are met.

Observation:
The current requirements of the EU taxonomy for renovation measures are too technocratic and difficult to verify; they also prevent renovations; Loans must be split into different parts so that at least partial amounts can be recognized as taxonomy-compliant.

Solution:
Establish clear, measurable standards (for example: improve by at least two energy classes, reduce primary energy demand by 30% without excluding renewable energy, or multiple elements as recommended in a Renovation Passport); In terms of financing, taxonomy compliance should apply not only to partial amounts, but to the entire renovation loan.

Observation:
The Do No Significant Harm (DNSH) requirements, which are designed to ensure that economic activities do not significantly harm any of the six EU environmental objectives, are overly complex and disproportionate – especially for small renovation loans, and in many cases it is impossible to verify or demonstrate compliance with these criteria at the level of individual economic activities.

Solution:
It should be possible to report on the DNSH criteria as observation criteria, but not as a prerequisite for taxonomy compliance. Only the climate risk analysis could be considered mandatory, provided that the criteria are easily verifiable in practice.

Observation:
Frequent and contradictory communications from the EU Commission create irritation, room for interpretation and legal uncertainty.

Solution:
It seems expedient to introduce a formal consultation procedure with fixed deadlines, public participation of the relevant interest groups and a clear delimitation of responsibilities.

Observation:
The lack of availability of data as well as the ambiguity and inconsistency of data protection regulations prevent the use of energy and building data; this complicates ESG reporting, reduces transparency and, above all, prevents credit institutions from using real estate-related information to improve their advisory and product offering.

Solution:
A legal basis is needed that allows credit institutions and other market participants to access and use data at the property level for both reporting purposes and client advice; GDPR Article 6(c),(e),(f) should be used as an authorisation standard for sustainability and climate adaptation data.

Observation:
The lack of demarcation of the minimum standards between residential and commercial loans leads to pointless audit obligations and unnecessary bureaucracy; Social standards are regulated nationally anyway.

Solution:
Real estate loans to private owners and small and medium-sized enterprises should be exempted from minimum standards checks; commercial loans should be considered to be compliant as long as there are no non-compliances.

The complete White Paper on the EU Taxonomy, jointly authored by vdp and EEM NL Hub, is available here .