Featured Product

    ESMA Consults on Disclosure Obligations Under Taxonomy Regulation

    November 05, 2020

    ESMA published a consultation paper containing its draft advice to EC on Article 8 of the Taxonomy Regulation. Article 8 of the Taxonomy Regulation obliges undertakings covered by the Non-Financial Reporting Directive to publish information on how and to what extent their activities are associated with economic activities that qualify as environmentally sustainable under the Taxonomy Regulation. The consultation specifies the content, methodology, and presentation of the key performance indicators (KPIs) that non-financial undertakings and asset managers are required to disclose. The consultation closes on December 04, 2020, with ESMA expected to deliver its final advice to EC by February 28, 2021.

    Article 8(2) of the Taxonomy Regulation requires non-financial undertakings to use three KPIs: the proportion of their turnover, their capital, and operating expenditure related to environmentally sustainable activities. Article 8(4) requires EC to adopt a delegated act to supplement these obligations by specifying the content, presentation, and methodology of the information to be disclosed by both financial and non-financial undertakings subject to the Non-Financial Reporting Directive. EC has to adopt the delegated act by June 01, 2021. In September 2020, ESMA received a call for advice from EC, requesting input on the certain aspects of the delegated act, which EC shall adopt. The proposals of ESMA aim to ensure a consistent application of the disclosure obligations required under the Taxonomy Regulation by non-financial undertakings and asset managers that fall within scope of the Non-Financial Reporting Directive. The key draft proposals for consultation address the following aspects:

    • On non-financial undertakings, the advice covers the content of the three KPIs, namely the proportion of turnover, and the capital and operating expenditure related to environmentally sustainable activities which must be disclosed and set out specific considerations related to the methodology for their preparation and presentation.
    • On asset managers, the advice proposes a KPI calculation model based on eligible investments; this comes together with advice on how the KPI should be calculated and presented to allow uniform disclosure on how the activities are directed at funding environmentally sustainable economic activities.

    Annex I to the consultation paper contains the EC call for advice to ESAs while Annex II contains the consultation questions for stakeholders which are presented throughout the consultation paper. Annex III sets out the proposal for a standardized table for non-financial undertakings to use for the presentation of the three mandatory KPIs. Annex IV sets out proposal for a standardized table for asset managers to use for the presentation of the KPI that ESMA is suggesting requiring from them. Annex V presents an analysis providing top-down estimates for the three KPIs included in the call for advice, for the EU economy as a whole and by Statistical Classification of Economic Activities in the European Community (NACE) macro sector, based on a methodology developed by the EC Joint Research Centre report on the EU Taxonomy. To ensure that the draft advice covers key considerations in the market while meeting the timeline for the delivery of this advice by the end of February 2021, ESMA has conducted a targeted outreach with various stakeholders to rapidly advance in the development of the draft proposals that are included in this consultation paper. In accordance with the call for advice of EC, ESMA also closely cooperated with the other two ESAs to ensure consistent and coherent recommendations from the three authorities. 

     

    Related Links

    Comment Due Date: December 04, 2020

    Keywords: Europe, EU, Banking, Insurance, Securities, Taxonomy Regulation, NFRD, Disclosures, ESG, Sustainable Finance, Climate Change Risk, ESAs, EC, ESMA

    Featured Experts
    Related Articles
    News

    EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation

    The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).

    May 23, 2022 WebPage Regulatory News
    News

    EBA Publishes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.

    May 23, 2022 WebPage Regulatory News
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    News

    EU to Amend Credit Risk Adjustment Rules; ESAs Submit Queries on SFDR

    The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    May 13, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.

    May 12, 2022 WebPage Regulatory News
    News

    MAS Amends Notice 635 and Issues Second Proposal on Green Taxonomy

    The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.

    May 12, 2022 WebPage Regulatory News
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8201