On 5th April, the European Commission published the draft version of its long-awaited
“Environmental Delegated Act” with the technical screening and Do-No-Significant-Harmmcriteria for the four remaining environmental objectives of the Taxonomy Regulation (environmental objectives 3 to 6). This delegated act will complement the so-called Climate Delegated Act (the first delegated act under the Taxonomy Regulation), the Disclosures Delegated Act and the Complementary Delegated Act. The Commission also published new draft annexes that would amend these acts.

The draft Environmental Delegated Act published in April builds on the recommendations for technical criteria for the four remaining environmental objectives of the Platform on Sustainable Finance (published on 30 March 2022). From the point of view of the construction industry, these recommendations showed fundamental weaknesses in terms of the usability and practicability of their recommendations.

In recent months, the construction “ecosystem”, through many of its organisations
representing the built environment, real estate and property sectors at European level, has provided its constructive input and expertise to the European Commission while repeatedly calling for urgent corrections to the Platform report, especially regarding the fourth environmental objective (“Transition to a circular economy”).

This input seems to have been partially considered by European Commission services involved in the drafting of the delegated act. We acknowledge that some criteria are more balanced and could be technically achievable in the medium to long term – if companies, notably SMEs, are provided with sufficient support and guidance.

However, it has become apparent that other criteria have been chosen without proper
justification and lack transparency (e.g. new maximum values for primary raw material used for certain material categories and construction products for “Construction of new buildings” and “Renovation of buildings” or a new additional criterion instead of a deviation possibility if opposing national legislation or if the use of secondary raw materials leads to increased CO2 emissions for “Maintenance of roads and motorways” and “Use of concrete in civil engineering”).

In general, taxonomy criteria should be easily understandable for businesses, especially in sectors composed mainly of SMEs such as the construction sector and be genuinely achievable across the EU. Some of the technical screening criteria proposed by the Commission would still raise problems for the construction sector not only for practical reasons (it is, for example, highly questionable whether all thresholds and
maximum/minimum values would be achievable due to reasons related to the local
availability of secondary raw materials) They would also make reporting under the EU
taxonomy more difficult (cf. also the C2050 Alliance’s 6 key messages on sustainable finance).

We have also observed that the draft delegated act falls short of ensuring sustainability in building renovation because the manufacturing of these products is not covered.
Construction products may be produced and used in such a way as to deliver sustainable construction works. Therefore, it is illogical that economic operators may be classified as sustainable, but product manufacturers may not. More so, it is important to apply these criteria to construction products in the final version of the EU taxonomy delegated act to guarantee that the manufacturing may be recognised as sustainable. This modification could deliver a more coherent and comprehensive approach to sustainable building renovation, benefiting the entire construction ecosystem.

We firmly believe that the EU taxonomy framework should support the construction sector and all its companies in their transition to more sustainable and climate-friendly business models. The EU taxonomy is a huge opportunity that cannot be missed. We therefore call on the Commission and the co-legislators to revise the current draft to ensure the usability of the Environmental Delegated Act criteria. They should be based on realistic and transparent thresholds, thereby enabling the sector to live up to its key role in contributing effectively to the transition to a low-carbon, resource-efficient and circular EU economy.

We also take this opportunity to reiterate our deep regrets that the construction sector
(one of the European Commission’s 14 ecosystems) is not represented in the new Platform on Sustainable Finance. We are concerned that existing technical criteria could be reviewed, and new criteria be developed, without the involvement of the construction sector. We urgently call on the European Commission to ensure that the “Stakeholder Request Mechanism” will continue to allow the construction ecosystem to provide its technical expertise when criteria for construction are reviewed or drafted.

To have a look at the full Joint Statement, click here

Following the publication of its construction pathway on 15 March 2023, the Commission services represented by Katharina Knapton-Vierlich, Head of Unit Construction, and Ilektra Papadaki, Team leader, joined the Construction 2050 Alliance members to exchange on the upcoming challenges, opportunities, and possible ways forward.

To have a look at the presentation of the European Commission, click here

On January 13, the #EUConstruction2050 members took stock of the achievements of the Alliance since its launch 3 years ago, while discussing objectives and initiatives for 2023 and the future as the #construction sector is crucial to deliver on the European Union ambitions.

Stay tuned for an exciting year ahead!

Last week, the Construction 2050 Alliance gathered more than 150 stakeholders from the built environment and beyond to exchange views on Sustainable Finance and the expected impact of the EU taxonomy on the construction sector during its hybrid event held on 18 October 2022.

Considering the increasing concerns along the whole construction value chain, and to better understand the potential pragmatic implications from applying the taxonomy in the sector, the Alliance gathered experts from the financial, environmental and construction fields to discuss.

The event started with a presentation of the European Platform on Sustainable finance and its works by one of its members, Ms. Lara Muller (read the presentation). Then, Mr Hugo Gallagher, Senior Policy Advisor at the European partnership of Sustainable Investment For a EUROSIF, gave an overview on the potential consequences in the construction market from the financial perspective. The debate was lively also thanks to the participation of the World Green Building Council Director for Europe Mr Stephen Richardson, who shared their vision on sustainability and circularity in relation to financing as an environmental NGO (read the presentation).

A panel discussion also took place examining and illustrating current and potential challenging implications of the Taxonomy for construction companies. Mr. Philip van Nieuwenhuizen, President of the European Builders Confederation EBC, Mr. Bernard Gilmont of European Aluminium, Mr. José Luis Blasco of the Spanish large contractor Acciona (read the presentation) and Mr. Frank Hovorka of the French Real Estate Developers debated the inconsistency of certain criteria when applied to construction in different geographies, concerns about access to loans and credits, difficulties with reporting, under-representation of construction actors in the platform’s debates, among others.

In the closing remarks, FIEC Vice President Yiannis Markides presented the main messages of the Alliance:

1. The Taxonomy underlines again the construction sector’s huge potential for achieving the EU Green Deal goals.
2. The Taxonomy may offer a European approach of “sustainable construction” based on existing EU Regulations and European sustainability assessment standards, but some criteria should be improved, and reporting methodologies clarified.
3. The Taxonomy can set a new benchmark for competitiveness of the construction sector.
4. The Taxonomy must create the conditions of mobilising capital to support the transition to sustainable construction.
5. Sustainability reporting obligations under the Taxonomy must be simple and proportionate.
6. Non-alignment with the Taxonomy must not cut off companies from financing and funding.

The members of the Construction 2050 Alliance look forward to further exploring and clarifying strategic topics for our industry, stay tune to be informed of our next activities.

To read the full Construction 2050 Alliance messages on Sustainable Finance, click here.