Sustainable Finance & EU Taxonomy

Sustainable Finance incorporates Environmental, Social and Governance (ESG) principles when making investment decisions. As pressure increases it becomes crucial for many companies to align their economic activities with the so-called EU Taxonomy objectives.

Green investments are on the rise, and so are your chances

Increase your sustainability performance and opportunities on the capital market. Get your company fit for the EU Taxonomy regulation, green financing, and sustainable investing opportunities.

Sustainable finance and its importance for business

Sustainable finance has developed into an important field of action for companies. In the EU policy context, sustainable finance is closely related to the European Green Deal. Financing for sustainable development supports economic growth while reducing pressures on the environment. In addition to environmental protection, the sustainable finance definition also includes social and governance aspects.

Related topics:

The EU Taxonomy for sustainable growth

The EU Taxonomy is a classification system for economic activities to determine the extent to which they are environmentally sustainable. Therefore, it is also known as the EU Green Taxonomy. For market actors, such as financial institutions, the sustainability framework greatly supports identifying the best options for sustainable investments. While financial institutions´ customers are expanding their taxonomy-aligned business by investments (CAPEX plans) to make the transition happen, financials face business opportunities through financing these transition plans. Thus, the EU Taxonomy is a significant lever to promote sustainable growth through capital flows.

Benefits of sustainable finance

Sustainable finance contributes to transparency on risks related to ESG factors. Measures in terms of sustainable finance may impact the mitigation of such risks through the appropriate governance of financial and corporate actors. Your benefits of aligning with sustainable finance requirements and related topics are therefore manifold:

Receive a comprehensive overview of opportunities and risks for your operations in connection with climate change adaptation

Get answers to key questions: Which projects support the alignment of my business operations with EU Taxonomy? Can I take advantage of sustainable finance in this regard?

Benefit from an improvement in your credit rating as a sustainable business – provided by a higher ESG rating.

Optimize your communication with financial institutions, investors, and other stakeholders.

Aligning your business with the EU Taxonomy classification – as sustainability experts, we offer this and much more.

Our sustainable finance services

We follow a holistic approach to help you find the best solution. Our experts in sustainable finance support you in dealing with all issues reflected in your core business – from strategy to the implementation of operational regulatory requirements.

EU Taxonomy alignment

The perfect match for your sustainability performance and reporting
The EU Taxonomy regulation determines, which economic activities can be considered sustainable. More and more businesses must provide information as to what extent their economic activities are aligned with the EU Taxonomy as part of their non-financial reporting. We help you to fulfill these regulatory requirements. In the process, we also pinpoint opportunities for you to make your business operations more sustainable.
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SBTi & PCAF - financed emissions

Measure and reduce Carbon Footprints of your portfolio
The financed emissions (Scope 3.15) usually account for the majority of a financial institution’s Carbon Footprint. To reduce the emissions your investment portfolio causes, you need to calculate the baseline first. We help you apply the PCAF standard, enabling you to measure your financed emissions. Based on that we develop strategies and set science-based targets (SBTi) together with you on how to decarbonize your portfolio.
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CDP reporting

Contribute to climate protection by processing and providing climate-relevant data
The Carbon Disclosure Project (CDP) aims to make a positive contribution to environmental and climate protection by processing and providing climate-relevant data. Our goal is for companies to address sustainability and climate challenges in a structured and holistic manner. Therefore, we are happy to support your company in dealing with the CDP programs climate change, water, forest and supply chain.
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TCFD reporting

Assess the threats of climate change and take advantage of the opportunities for your business
The Task Force on Climate-Related Financial Disclosures (TCFD) is committed to supporting the disclosure of information related to climate change, improves the understanding of material risks and enables market participants to assess opportunities and threats resulting from a changing climate. Our experts give you the best support for implementing a TCFD reporting system.
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Green bonds

Identify the most relevant factors for expanding the investor pool
Attract new environmentally-oriented investors. Increase the refinancing potential without reducing liquidity and credit risk and create additional marketing value. We support you in the whole process by issuing or investing in green bonds. From assisting in the selection of sustainable products and ensuring that the project and/or product complies with the criteria of the EU Taxonomy, to developing a framework for issuing sustainable finance. Our experts not only accompany you before, during and after the issuance of the green bond but also ensure the verification (second-party opinion).

ESG and climate risk management

Get ahead of the future to avoid being surprised by any incidents affecting your business
What is known today might be different in the future. Our services address the full spectrum along the cycle of identifying, analyzing, evaluating, monitoring, and responding to actual and potential risks. Based on our tools and experience, we offer you advice on emerging challenges and help you to respond. Among other aspects, we consider market risks, loss and damage to assets due to climate change and societal change, and direct and indirect risks along the value chain as well as for specific business sectors. Our risk management activities provide you with sustainable insights for future challenges.

ESG ratings

Become more attractive for investors by picking an ESG rating provider
When assessing the risks involved in investments, not only the financial but also the sustainability performance of a company needs to be considered. ESG rating providers measure how well a company manages its environmental, social and governance challenges. Be it ISS, CDP, Ecovadis or MSCI – they all have their own criteria, branch classification and rating systems. At denkstatt we help you to find the suitable ESG rating provider for your audience, respond to the questionnaires efficiently, and organize the internal evidence document research so that you have a safe and sound process for your upcoming ESG reports in place.

Subsidy management

Realize your projects through the optimized use of environmentally relevant financing instruments and funding opportunities
Especially when looking at high energy- and process-related CO2 emissions, your company faces a challenge in decarbonization. We also support you financially with sustainable subsidy management on the path to greenhouse gas neutrality. By means of customized subsidy analyses of planned investments, we reduce your costs and business risks. Through our many years of experience, we identify sustainable funding opportunities for our international clients and provide support in the submission and processing of funding projects.
We support you in different stages of your processes and find a strategy that suits your company!


Frequently asked questions on ustainable finance

The EU Taxonomy regulation is a classification system for corporate sustainable activities. It is seen as a huge lever for implementing the European Green Deal as it increases the attractivity of sustainable business models for the financial market.

The EU Taxonomy is legally binding. Financial institutions are obliged to disclose the extent to which the activities of companies they finance are environmentally sustainable. Companies currently covered by the Non-Financial Disclosure Directive (NFRD) must, on the other hand, report the share of taxonomy alignment. In the future, the NFRD will be replaced by the Corporate Sustainability Reporting Directive (CSRD), which is why the scope of  the EU Taxonomy will be extended.

The difference between sustainable finance and green finance lies in the focus. Sustainable finance refers to all sustainability topics. Green finance, on the other hand, focuses on environmental issues such as carbon emissions, biodiversity or the prevention of water pollution.

Sustainable finance covers many topics, which are linked to sustainable development, as well as levers and actors in the financial market. Therefore, it includes measures for sustainable development from a financial perspective. ESG is a part of the sustainable finance topics. An ESG rating provides information on how well a company performs in the areas of environmental, social and governance.

First, in order to increase visibility: especially for bonds, access to long-term oriented capital providers can be increased by appearing in the rating institution’s catalog, and even more so with a prime rating. Second, an external independent quality seal covering all of the branch’s ESG aspects underpins one’s claim to sustainability. Third, good ratings are also acknowledged by banks. There still is a certain subjective factor involved in ESG performance assessment, and good ratings can help to use the confirmation bias to one’s own advantage.

With the rating framework, I get an up-to-date, neutral external definition of “best in class” to benchmark against, with direct or indirect competitors across the branch, globally. This serves as a tool for sustainability strategy evaluation and gives an efficient overview of strengths and weaknesses.

Keeping track of the different rating institutions, their target groups, their methodological specifics, and their information needs for favorable results is not a trivial matter. denkstatt’s experience helps you to get a quick overview, choose a rating provider that fulfills your needs, and organize the rating process efficiently. In addition, we guide you in making the most use of the assessment report for advancing your sustainability strategy in the long run.

Many rating providers base their assessment on publicly disclosed information. If that is not available or not well-structured, and if the company does not cooperate, the result is worse than it needs to be. ESG ratings do not exclusively conduct a sustainability performance evaluation, but mostly a sustainability management and transparency evaluation. So especially when there is a low level of transparency or a lack of structured approaches, the rating result is bad, even though behind the scenes progress in sustainability may have been made.

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