THE PROTOCOL

In its role as facilitator of sustainability projects for Venice and its territory, the Foundation wants to promote the use of sustainable finance instruments, providing an operational protocol developed together with the Department of Economics of Ca’ Foscari University of Venice and KnowShape, a Ca’ Foscari’s research spin-off.

This protocol, called ‘Art. 5 Finance Advisory’, is implemented using the KnowShape platform, which allows all the steps necessary for the formal representation of sustainability projects and the financing appraisal to be performed in compliance with the regulations.

It should be underlined that, in projects facilitated by the Foundation, the operational protocol requires the introduction of regulatory KPIs aimed at achieving specific ESG sustainability objectives for Venice. The aim is to maximize the impact that each project can have on the Venetian system.

Steps of the ‘Art. 5 Finance Advisory’ operational protocol

• Selection of sustainability projects to be financed;
• Formulation of the sustainability plan compliant with the EU Taxonomy (sustainability KPIs and related targets);
• Definition of the specific ESG sustainability objectives for Venice within the plan;
• Support during the road show to illustrate the regulatory aspects of the sustainability plan and the financing operation;
• Origination of art. 5 of EU Taxonomy financial instruments  (sustainability bond & loan, equity): preparation of documents compliant with regulations entering in the investor’s credit investigation process and its GAR calculation;
• Operational management of third-party engagement:

– Releasing Second Party Opinion (SPO) on project feasibility

– Operation’s arranger

• Monitoring of art. 5 of EU Taxonomy financial instruments (bond & loan, equity): preparation of monitoring reports compliant with the regulations and monitoring of contract covenants.

By contacting info@vsf.foundation it is possible to learn more about the application of the operating protocol.

Summary of regulatory references for the formulation and financing of sustainability projects: the EU taxonomy.

The EU Taxonomy (EU Regulation 2020/852) requires that:

• Sustainability projects aimed at pursuing the objectives defined in the EU Taxonomy must be formulated and communicated to stakeholders through specific sustainability plans called «CapEx Plan»;
• Financial instruments that explicitly invest in economic activities pursuing the objectives defined in the Taxonomy (pursuant to art. 5 of the EU Taxonomy) are the only sustainable investments that can be considered in the sustainability index of financial institutions: the Green Asset Ratio;
• Platform Recommendations on Data and Usability of the EU Taxonomy (11 October 2022).

“The Platform stresses the importance of Capex, Capex plans, and the role it plays in helping companies to shape their transition plans and access funding for them.

The KnowShape platform, used to apply the protocol, was:

• directly discussed with the European Commission which has included the platform in a Technical Report highlighting the following features:

– “The solution is directly based on the text of the EU taxonomy and is one of the closest aligned solutions with the EU taxonomy.”

– “This closeness to the original legislative text is a clear added value in the way to implement the EU taxonomy and to reach the science-based objectives founded on technical screening criteria.“

– “… this ensures accurate and detailed data.“

• developed based on the results of a scientific research on the EU Taxonomy, which was also considered by the European Commission’s Technical Report.