European Commission announces revision of the technical screening criteria under the EU Taxonomy Climate and Environmental Delegated acts
Experience from the first years of reporting shows that parts of the technical screening criteria are difficult to apply in practice. Stakeholders have flagged persistent issues, including excessive complexity, poor alignment with updated EU legislation, and unclear or overly detailed requirements - particularly around the “do no significant harm” tests.
The consultation focused on targeted simplifications to the EU Taxonomy. The Commission said the changes were aimed at improving usability, encouraging wider uptake, and supporting access to green finance.
What happens next:
- By 14 April: Stakeholders can submit feedback to the consultation.
- By summer: The Commission is expected to publish a final revised Delegated Act.
- Thereafter: The Act will enter a scrutinisation period of up to six months.
- Earliest application: 2027.
Update on the EU Industrial Accelerator Act
The Industrial Accelerator Act (IAA) aims to increase demand for low carbon, European made technologies whilst accelerating permitting and enhancing economic security through the IAA’s introduction of Made in EU” and low carbon requirements for public procurement and public support schemes. Anticipated impacts of the IAA are expected to be:
The IAA aims to accelerate deployment of low carbon EU manufacturing through:
- Raising manufacturing’s GDP contribution target to 20% by 2035
- New conditions for investments >€100m in concentrated supply chains
- Simplified permitting, including single digital systems and tacit approvals
- Creation of Industrial Acceleration Areas for clean manufacturing clusters
What’s next: The proposal now enters negotiations between the European Parliament and the Council ahead of adoption and entry into force.
EBA launches consultation on discussion paper focusing on the simplification and assessment of the credit risk framework
Following its 2025 efficiency review, the European Banking Authority (EBA) has launched a discussion paper on simplifying Pillar 1 credit risk requirements. The paper explores ways to make the framework simpler and easier to navigate, while preserving risk sensitivity, comparability across banks, and safeguards against regulatory arbitrage.
Key proposals include consolidating overlapping rules, improving structure and presentation, and harmonising definitions to create a more coherent Single Rulebook. The EBA also highlights the integration of environmental and social risks into credit risk modelling, including through stress testing impacts on probability of default (PD) and loss given default (LGD).
Why it matters: While aimed at simplification, the proposals point to more consistent - and potentially more sustainability aware credit assessments, with implications for how banks price and manage risk.
ECB study finds causal link between climate disasters and the cost of debt
Climate risk is now being reflected in sovereign borrowing costs, with the strongest effects seen in highly indebted and developing countries. Climate related disasters are already pushing up government bond yields, reinforcing climate exposure as a material sovereign risk factor.
The study differentiates between transition risk and physical risk. Carbon intensive economies face higher funding costs due to decarbonisation pressures and future revenue risks, while acute physical shocks - such as storms and droughts. drive the most persistent increases in yields. Gradual warming, by contrast, shows limited market pricing to date.
Fiscal resilience is critical. Countries with low debt tend to see only temporary yield impacts following climate shocks, while highly indebted sovereigns experience larger and longer lasting cost increases, raising debt sustainability concerns.
Why it matters for treasury teams: Climate exposure is no longer a long term risk - it is affecting sovereign yields today. For treasurers, this strengthens the link between climate risk, country risk premiums, and funding costs, particularly in emerging and climate vulnerable markets. Physical climate shocks are becoming a measurable input into debt sustainability and risk pricing.
For those looking to discuss any of the above further, please reach out to our authors:
Rui Zu, Director, Sustainable Finance Advisory
Usman Zaheer, Associate, Sustainable Finance Advisory
Anika Wadhwa, Analyst, Sustainable Finance Advisory
