Name KBI Global Investors
Signatory type  Investment manager
Region of operation Global
Assets under management Approx. €9.2bn
Asset class Equities
Geography Global including emerging markets
Sector Various, but focus on water, clean energy, agribusiness and sustainable infrastructure.
Environmental objective Mitigation
Economic activity All

In our view, our institutional investors have the knowledge and expertise to be able to assess whether or not our strategies are sustainable, without the need for the taxonomy. However, we recognise that this possibly may not be the case for all investors and is certainly not the case for most retail investors, so in that sense we understand the need. Now that the taxonomy is law in the EU, we will examine how to calculate and report on taxonomy compliance as we believe that investors will require investment managers to demonstrate compliance for any fund claiming to be sustainable.

Other aspect you would like to mention?

We chose a thematic fund, focussed on sustainable infrastructure across three broad areas: water, clean energy and food. There were approximately 40 holdings in the portfolio.

Taxonomy implementation

Principles, criteria, thresholds

We focussed on mitigation and only looked at turnover, due to the severe challenges of obtaining sufficiently detailed data on capex and opex. 

Do no significant harm assessment

The do no significant harm (DNSH) criteria are often highly technical and require far more detail than companies typically publish, even in the case of large cap EU companies (and even more so for smaller companies or companies outside the EU). We took the view that we could assume that EU companies comply with EU legislation and regulations, unless there was evidence to indicate otherwise. For example, we assumed compliance with DNSH criteria relating to Environmental Impact Assessments, for operations in the EU.  

However, for companies operating outside the EU, information relating to the DNSH criteria was NOT available. We are now engaging with those companies to verify compliance in line with the recommended approach that investors should “step in and assess compliance themselves” for companies which did not report the percentage of turnover compliant with the taxonomy.

Social safeguards assessment

We have yet to finalise our methodology in this area. We excluded all companies which were in serious and ongoing breach of the UN Global Compact (UNGC) Principles. We will give further consideration to whether this is sufficient to meet the requirement for the social safeguards assessment.

Turnover/capex/opex alignment

We focussed on turnover as data for capex and opex was very difficult to obtain. Some 47% of turnover was in scope at the most basic level (an eligible economic activity) and 25% of this total definitely met the technical metric/threshold, leaving 22% where sufficiently detailed data was not yet available to determine eligibility. Where the technical criteria/threshold was met, it appears that no companies have published sufficient information to verify that the DNSH criteria have also been met. However, we are engaging with companies to obtain the DNSH-related information and data that would allow us to complete the exercise.

Additional comments

It is clear that data availability is by far the biggest challenge, particularly for the DNSH criteria. Most companies in this portfolio are located outside the EU, are medium or small cap, and do not even publish a sustainability report. It may not be a particular burden to companies to publish, for example, information relating to Environmental Impact Assessments, but until the emergence of the taxonomy this information would rarely, if ever, be required by investors. It will undoubtedly take quite some time for companies to begin to publish appropriate data, and direct engagement with companies is the only viable option in the interim.

Alignment results

Based on our knowledge of the data currently available and our efforts to date, it was impossible to claim compliance with the taxonomy for any percentage of the revenue of companies in our test portfolio. This is largely because DNSH criteria are often highly technical and investee companies do not publish information. Though this is not necessarily insurmountable in the medium term - as we believe companies have, or should have, the required information - when companies are outside the scope of the revised Non-Financial Reporting Directive (NFRD) rules, it may take considerable time for this to information to emerge. This is particularly the case for small cap companies outside the EU, and for companies not particularly dependent on outside investors or investors from the EU (companies where a national government controls a majority shareholding would be a good example). We expect companies to find it challenging for the next 2-3 years to accurately quantify taxonomy exposure. In these circumstances, and taking a precautionary approach, we believe that investors will report numbers that are far below their “real” taxonomy alignment.

Challenges and solutions

1 Turnover data by NACE not readily available. Prior work to publish our SDG revenue alignment was re-purposed.
2 Assess technical thresholds and metrics, andDNSH criteria. Generally not available, can only be addressed by engaging with investee companies.
3 Assess compliance with social safeguards. Though not finalised, likely to be in line with existing exclusion of companies in serious breach of UNGC.


We recommend early engagement with investee companies to encourage them to publish relevant technical data required for the taxonomy.