The European Commission (EC) published the Delegated Regulation 2021/2178, which specifies the content and presentation of information to be disclosed by undertakings subject to Articles 19a or 29a of Directive 2013/34/EU about the environmentally sustainable economic activities. The rule also specifies the methodology to comply with the disclosure obligations. Regulation 2021/2178 supplements the Taxonomy Regulation (2020/852) on the establishment of a framework to facilitate sustainable investment. Regulation 2021/2178 shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
Article 8(1) of the Taxonomy Regulation requires undertakings that are subject to Articles 19a or 29a of Directive 2013/34/EU to disclose how, and to what extent, their activities are associated with environmentally sustainable economic activities. Article 8(2) of the Taxonomy Regulation requires non-financial undertakings to disclose information on the proportion of the turnover, capital expenditure, and operating expenditure (key performance indicators) of their activities related to assets or processes associated with environmentally sustainable economic activities. That provision, however, does not specify equivalent key performance indicators for financial undertakings—that is, credit institutions, asset managers, investment firms, and insurance and reinsurance undertakings. Therefore, Regulation 2021/2178 supplements Article 8 of the Taxonomy Regulation to specify the key performance indicators for financial undertakings and further specify the content and presentation of the information to be disclosed by all undertakings, along with the methodology to comply with that disclosure.
Non-financial undertakings, asset managers, credit institutions, investment firms, and insurance and reinsurance undertakings shall disclose the information referred to in Article 8 of Taxonomy Regulation as specified in Annexes I; III and XI; V and XI; VII and XI and, IX and XI to the Regulation 2021/2178, respectively. The information shall be presented in tabular form by using the templates set out in the Annexes to the Regulation 2021/2178. Disclosure rules common to all financial and non-financial undertakings include the following:
- Financial and non-financial undertakings shall include all additional disclosures accompanying the key performance indicators in the same parts of the non-financial statement that contains those indicators, or shall provide cross-references to the parts of the non-financial statements that contain those indicators.
- Information disclosed in accordance with Regulation 2021/2178 shall cover the annual reporting period from the previous calendar year of the date of disclosure.
- Financial and non-financial undertakings shall provide in the non-financial statement the key performance indicators covering the previous annual reporting period. The first annual reporting period shall cover the year 2023.
- The key performance indicators shall cover only the objectives of climate change mitigation and climate change adaptation until 12 months after the date of application of the delegated regulations that contain the technical screening criteria for the other environmental objectives and that have been adopted pursuant to the Taxonomy Regulation.
The key performance indicators of non-financial undertakings, including any accompanying information to be disclosed pursuant to Annexes I and II to Regulation 2021/2178, shall be disclosed from January 01, 2023. The key performance indicators of financial undertakings, including any accompanying information to be disclosed pursuant to Annexes III, V, VII, IX, XI to Regulation 2021/2178, shall be disclosed from January 01, 2024. By June 30, 2024, EC shall review the application of Regulation 2021/2178.
Effective Date: December 30, 2021
Keywords: Europe, EU, Banking, Insurance, Securities, ESG, Climate Change Risk, Sustainable Finance, Taxonomy Regulation, NFRD, Investment Firms, Disclosures, EC
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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