This week, the Construction 2050 Alliance organised a public event on Sustainable Finance and the impact of the EU taxonomy on the construction sector. The Construction 2050 Alliance is a partnership established in 2020 made of more than 50 European organizations, bringing together the actors of the built environment to shape a common vision towards a sustainable construction sector. It was initiated by EBC, FIEC, CECE and CPE, who also make up its Steering Group.
Considering the increasing concerns regarding the application of the EU Taxonomy in the construction sector, the Alliance held this exchange with financial, environmental and construction stakeholders to better understand the issues at hand.
To set the scene, Ms. Lara Muller, a current member of the platform, presented the structure and work of the European Platform on Sustainable Finance, followed by Mr. Hugo Gallagher, Senior Policy Advisor at the European Sustainable Investment Forum EUROSIF, who shared a financial perspective on the relevant aspects for construction and Dr Stephen Richardson, from the World Green Building Council, who shared the considerations of environmental NGOs.
A panel discussion took place examining the practical implications and impact of the Taxonomy for the companies of the construction value-chain. EBC President Mr. Philip van Nieuwenhuizen participated in the exchange, along with Mr. Bernard Gilmont of European Aluminium, Mr. José Luis Blasco of the Spanish large contractor Acciona and Mr. Frank Hovorka of the French Real Estate Developers (FPI).
In his intervention, President van Nieuwenhuizen reminded that the new rules on sustainable finance and sustainability reporting are still being defined, while embedded in several legislative and regulatory instruments, which creates uncertainty. The potential repercussions of the EU taxonomy for construction SMEs are unknown, thus scaring. He noted a major concern regarding SMEs’ ability to access credit and loans when the new Taxonomy rules enter into force, including the delayed Delegated Act on the Circular Economy.
EBC President van Nieuwenhuizen stressed that being taxonomy-compliant for a construction company should not be consider as a quality label. He added that the administrative burden for SMEs that will arise from reporting obligations is expected to rise significantly, in a complex regulatory framework. He emphasized that SMEs do not only operate as single actors but are essentially involved in the construction value chain. The rules currently developed are modelled for large companies and multinationals. Yet they are expected to have a significant trickle-down effect on SMEs, while the latter do not have the capacity, technical knowledge nor human resources to provide sustainability information to banks or through sustainability reporting in the same way as large companies.
President van Nieuwenhuizen concluded that even if SMEs are today not directly targeted, small and medium-sized businesses will be confronted with sustainability reporting requirements. In developing tools such as sustainability reporting standards, SMEs and craftsmen should be taken as the norm.
At the end of the event, the Construction 2050 Alliance presented its 6 key messages on sustainable financing in order to alert European policy makers on the opacity of the subject and the complexity perceived by the entire European construction value-chain.