EU Platform on Sustainable Finance report:  Streamlining sustainable finance for SMEs

The Platform on Sustainable Finance, an advisory body to the European Commission (EC) established under Article 20 of the Taxonomy Regulation, has published a report on streamlining sustainable finance for SMEs. Despite the critical role that SMEs play in the transition to a net zero, resilient and environmentally sustainable economy, SMEs face significant challenges in accessing external financing for their sustainability efforts. To address the challenges faced by SMEs in relation to use of the Taxonomy, the Platform proposes a tailored streamlined approach – "the SME sustainable finance standard" – to be used by banks and other financiers to classify the loans or other type of financing they provide to SMEs as sustainable (green or transition) finance and simplify any related voluntary reporting.

The standard focuses as a first stage on climate change mitigation and adaptation objectives and distinguishes between:

• activities: consisting of activities listed in the Taxonomy Climate Delegated Act, as well as other activities not included, but which may be considered in the future. For those activities not included, they can only be considered if they are included on a list of well-recognised labels and certifications pre-defined by the European Commission, which can serve as a proxy for their climate-related sustainability credentials in line with the proposed criteria.
• enterprises: consisting of (i) SMEs which have recently incorporated in their business model climate-related practices that pursue the transition to a sustainable economy; or (ii) an SME holding a climate-related certificate from a pre-defined list.
• investments: consisting of projects and measures that target and projects and measures for which simple and robust criteria have been developed.

The Platform recommends extending the standard to the four remaining Taxonomy environmental objectives at the earliest convenience. The report does not purport to represent or anticipate any future official guidance and views issued by the European Supervisory Authorities or the EC or its services.

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