EC Platform Publishes Final Report on Social Taxonomy
The European Commission's Platform on Sustainable Finance published the final report on social taxonomy. The report presents a proposed structure for a social taxonomy within the present European Union legislative environment on sustainable finance and governance. This environment currently consists of the existing legislation and the proposed initiatives on the European Union taxonomy, the proposed Corporate Sustainability Reporting Directive or CSRD, the Sustainable Finance Disclosures Regulation or SFDR, and the sustainable corporate-governance initiative.
The suggested structure of the social taxonomy employs certain structural aspects of the environmental taxonomy—namely, development of social objectives, types of substantial contributions, “do no significant harm” criteria, and minimum safeguards. Apart from the structural elements of a social taxonomy, the report suggests ways to ensure a balance in the relationship between an environmental taxonomy and a social taxonomy. One suggestion is that just as social and governance-related minimum safeguards are part of the environmental taxonomy, minimum environmental safeguards should be part of the future social taxonomy. The other suggestion is to integrate the social and environmental taxonomy more closely, with the environmental and social “do no significant harm” criteria being valid for both the social and the environmental activities. Finally, the report presents some requirements for future social criteria, and indicators within this framework, alongside ideas about the next steps for developing a social taxonomy. The next steps for developing a social taxonomy would be to
- Clarify the minimum safeguards according to the scoping note
- Conduct a study on the impact of a social taxonomy, considering different options for application and designs
- Work out a rationale for prioritizing objectives and sub-objectives
- Prioritize objectives according to the rationale
- Define the "substantial-contribution" and “do no significant harm” criteria for the first objective(s) and sectors
Related Links
Keywords: Europe, EU, Banking, Insurance, Securities, ESG, Sustainable Finance, Social Taxonomy, Platform on Sustainable Finance, CSRD, NFRD, SFDR, EC, Subheadline
Previous Article
ECB Issues Multiple Regulatory Updates in February 2022Related Articles
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
FSB Reports Assess NBFI Sector and Progress on LIBOR Transition
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.