European Taxonomy: GFT Supporting Banks and Businesses in ESG Investment Assessment

Milan, February 4, 2025 – GFT, a pioneer in digital transformation with extensive experience in the banking sector, has implemented an innovative solution to support companies in accessing sustainable credit.

GFT's solution, called the "Taxonomy Alignment Tool" (TAT), helps banks and their clients comply with the rigorous European ESG reporting standards related to credit assessment. This tool classifies corporate investments according to EU Taxonomy criteria, promoting the transition to an economy aligned to the three ESG pillars (Environmental, Social, and Governance). It evaluates the purpose of loans and ensures compliance with technical criteria outlined by the regulation at every step.

BPER has decided to integrate this tool into its credit granting process, not only to comply with regulations but also to meet clients' needs for financial support in sustainable investments based on objective evaluation criteria. These assessments can be integrated into corporate sustainability reports, ensuring that ESG objectives are measured objectively and reducing the risk of greenwashing or non-sustainable practices.

The Taxonomy Alignment Tool directly addresses the regulatory framework requirements for financial institutions, particularly regarding capital quality reporting (Pillar III).

To guide companies toward these goals, the Corporate Sustainability Reporting Directive (CSRD) was introduced at the end of 2022. This directive requires businesses to implement organizational and safeguard measures to assess and enhance the ESG impact of their operations.

Under CSRD, companies must disclose their KPIs related to EU Taxonomy-aligned investments, ensuring greater transparency and comparability in the market. In this context, companies that receive credit through BPER’s taxonomic assessment process gain the additional advantage of quickly obtaining the required data to qualify their investments as eco-sustainable.

At the same time, the bank collects taxonomic alignment data, offering dedicated financial products and integrating the information into its Pillar III and CSRD reporting processes.

"Financial institutions play a crucial role in directing capital flows toward activities undergoing a credible transition," says Sandro Tucci, Banking Market Leader at GFT Italy. "Although strict regulatory requirements are not yet fully in place, banks are increasingly recognized as active players in Europe's sustainability ambitions. In this context, GFT, aligned with its mission ‘Inspiring Real Future,’ has taken on the challenge by developing the Taxonomy Alignment Tool. The implementation of this solution positions BPER as a facilitator in the transition towards a more sustainable economy."

How the Taxonomy Alignment Tool Works

The Taxonomy Alignment Tool is a modular, highly configurable, and easily integrable solution designed to adapt to ongoing regulatory changes. It ensures that loans with a known purpose are assigned an eligibility and alignment qualification according to the EU Taxonomy, strengthening transparency in Green Asset Ratio (GAR) and Banking Book Taxonomy Alignment Ratio (BTAR) disclosure. GAR (Green Asset Ratio) measures the share of sustainable exposures granted to corporate and retail clients subject to CSRD, relative to the bank's total assets while BTAR (Banking Book Taxonomy Alignment Ratio) covers exposures to companies not subject to CSRD, providing a broader assessment of the bank’s credit portfolio.

Among the numerous advantages offered by the tool is the ability to monitor the adaptation of activities over time and automatically generate a reporting document. The ultimate goal is to verify which investments can be classified as “green” based on the six objectives defined in the regulation:

• Climate change mitigation
• Climate change adaptation
• Sustainable use and protection of water and marine resources
• Transition to a circular economy
• Pollution prevention and reduction
• Protection and restoration of biodiversity and ecosystems

GFT is exploring the possibility of integrating additional functionalities into the Taxonomy Alignment Tool, leveraging AI capabilities and utilizing LLM (Large Language Models) algorithms with the aim of automating document verification and assisting users in understanding taxonomic principles.

Thanks to these new processes for monitoring the ESG elements of credit, the customer experience of banking institutions like BPER can be significantly improved, offering greater transparency and accessibility to sustainable investments. Furthermore, corporate clients will benefit from expert guidance in finalizing taxonomy-aligned projects, ensuring that investments are not only compliant with regulations but also genuinely sustainable according to a well-defined standard.