SME Taxonomy Tool: Key Details
Empowering SMEs to align with the EU Taxonomy
About the SME Taxonomy Tool
The SME Taxonomy Tool is part of the CONFESS project, funded by the European Union, and is designed to help small and medium-sized enterprises (SMEs) to align with the EU Taxonomy. SMEs, which make up 99% of businesses in the EU, often face complex sustainability requirements that are challenging to meet. This tool simplifies the EU Taxonomy criteria, making them more accessible and manageable for SMEs, especially those operating in clean energy activities.
Tool Features and Benefits
Simplified EU Taxonomy Criteria
The tool customises the EU Taxonomy criteria to make them more accessible for SMEs. By adopting a tailored approach, it reduces complexity through simplified language, clear definitions, and curated resources. This enables SMEs to navigate the requirements effectively, building a clear understanding and facilitating alignment with the EU Taxonomy, all while minimising the associated administrative burden.
Dual Reporting Approach
•Backward-Looking Reporting: Evaluates past fiscal year activities for
alignment with the EU Taxonomy requirements offering SMEs a structured way to retrospectively assess their compliance.
• (In development)Forward-Looking Reporting: Guidelines and checklists to help SMEs align planned projects with the EU Taxonomy. Once available, these resources will support SMEs seeking investment.
Three-Step Conformity Assessment
• Self-Assessment: SMEs start by answering questions to assess their preliminary alignment with the EU Taxonomy, helping them gauge compliance and identify required documentation.
• Expert Review: CONFESS experts review SMEs' self-assessments and evidence to provide detailed feedback.
• 3rd Party Verification: SMEs needing a formal certification can use independent third-party verification to validate alignment with expert-reviewed data.
Using the SME Taxonomy Tool: Options
Step 1: Self-Assessment
An SME can familiarise itself with the requirements of the EU Taxonomy and based on the information provided, conduct a preliminary check of its Taxonomy alignment.
Step 2: Expert Review
CONFESS project experts review SMEs’ self-assessment data and uploaded evidence to deliver a detailed compliance evaluation and an updated alignment report.
Step 3: Independent Verification
Based on the expert check results an independent third-party review is conducted, followed by the issuance of a verified or validated statement.
Real-Time Feedback and Evaluation
The SME Taxonomy Tool provides SMEs with real-time feedback through a
visual dashboard that reflects their compliance status. Each criterion is colour-coded for clarity.
Green
Criteria fulfilled, demonstrating alignment with the EU Taxonomy
Yellow
Criteria probably fulfilled, but documentation insufficient
Red
Criterion not fulfilled
Who Can Use the SME Taxonomy Tool?
For now, the SME Taxonomy Tool is available across Germany, Italy, and Czechia.
Additionally:
Clean Energy SMEs:
SMEs can leverage the tool to align with the EU Taxonomy requirements, streamlining the process of sustainability assessment and reporting. The Tool empowers SMEs to better understand their Taxonomy aligned activities.
Financial Institutions:
Financial institutions can benefit from using the tool to evaluate their SME clients’ sustainability efforts and alignment with the EU Taxonomy. This enables them to build stronger relationships with SMEs committed to sustainable practices.
Large Corporations:
Large corporations can encourage SMEs within their supply chains to use the SME Taxonomy Tool, supporting their alignment with sustainable finance criteria and contributing to overarching sustainability goals.