Featured Product

    ISDA Responds to EC Consultation on Screening Criteria in EU Taxonomy

    January 12, 2021

    ISDA published its response to the EC consultation on the draft technical screening criteria for climate change mitigation and adaptation under the proposed delegated act for the EU Taxonomy. In its response, ISDA recommends, among others, alignment between the technical screening criteria and the relevant provisions in the existing EU legislation, establishment of a comprehensive framework for activities contributing to climate change mitigation, a phase-in approach to activities, respecting the technological neutrality of the screening criteria, and incorporation of a grandfathering clause for certain data. The ISDA response endorses the general remarks of the European Federation of Energy Traders. EC is expected to adopt the final delegated act for EU Taxonomy in early 2021.

    ISDA welcomes the opportunity to respond to EC consultation on technical screening criteria for climate change mitigation and adaptation. The following are the key highlights of the main recommendations of ISDA in response to the EC consultation:

    • Ensuring alignment between the technical screening criteria laid out in the delegated act and the relevant provisions in the existing EU legislation. ISDA supports the alignment between a number of technical screening criteria laid out in the draft delegated acts and the relevant provisions in the existing EU acquis. ISDA urges EC to ensure that such alignment constitutes a common principle underpinning the Taxonomy Regulation (Article 19(1)(d)).
    • Setting comprehensive framework for activities contributing to climate change mitigation. ISDA welcomes the EC commitment to ensuring that technical screening criteria consider whether the given economic activity makes a substantial contribution to climate change mitigation in accordance with the Taxonomy Regulation 2020/852. The delegated act should create a proportionate framework for both transitional and enabling activities, based on their respective contributions to climate change mitigation.
    • Phase-in approach. For activities upgrading or altering existing assets or processes, the adaptation solutions identified need to be implemented within five years from the start of the activity. A similar phase-in approach should apply for the existing activities when the delegated act comes into application as well as for new activities established after the delegated act comes into application. The length of the phase-in should be proportionate to the type of activity.
    • Respecting technological neutrality of screening criteria in line with Article 19(1)(a) of Taxonomy Regulation. The said article stipulates that the screening criteria must “identify the most relevant potential contributions to the given environmental objective while respecting the principle of technological neutrality, considering both the short and the long-term impact of the given economic activity.” 
    • Data grandfathering clause. A grandfathering clause should apply when data based on the time before the delegated act enter into force is compiled or transferred into the period for which taxonomy rules apply.
    • Others. A “where feasible” or “where applicable” principle in application of the criteria is vital to implementing the criteria in practical terms and would benefit from further guidance (with industry input). Furthermore, to avoid any doubt, it should be clearly stated that third-country activities count if an Environmental Impact Assessment has been completed in accordance with equivalent national provisions or international standards.” 

     

    Related Links

    Keywords: International, Europe, EU, Banking, Insurance, Securities, Climate Change Risk, ESG, Technical Screening Criteria, Sustainable Finance, Taxonomy Regulation, Responses to Consultation, EC, ISDA

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582