EC Mandates ESAs to Propose Amendments to SFDR Technical Standards
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR. EC is requesting ESAs to propose amendments related to product exposures to gas and nuclear activities, principal adverse impacts indicators, and transparency of financial product disclosures.
Amendments related to product exposures to gas and nuclear activities. ESAs have been requested to jointly propose amendments to SFDR regulatory technical standards in relation to the information that should be provided in pre-contractual documents, on websites, and in periodic reports about the exposure of financial products to investments in fossil gas and nuclear energy activities. The amendments shall ensure that the disclosures provide for full transparency about investments in sectors and sub-sectors of the economy covered by and compliant with the Complementary Climate Delegated Regulation. ESAs are required to submit a proposal on these amendments to EC by September 30, 2022.
Amendments related to principal adverse impact indicators and transparency of financial product disclosures. EC is inviting ESAs to consider extending the lists of universal indicators for principal adverse impacts, as well as other indicators, and refine the content of all the indicators for adverse impacts and their respective definitions, applicable methodologies, metrics, and presentation. EC is also inviting ESAs to jointly propose amendments to the SFDR regulatory technical standards in relation to the information provided in relation to financial products in pre-contractual documents, on websites, and in periodic reports on decarbonization targets, including intermediary targets and milestones, where relevant, and actions pursued. ESAs should also consider whether the provisions in regulatory technical standards regarding financial products referred to in the Taxonomy Regulation sufficiently address the disclosure and information on environmentally sustainable economic activities. ESAs are required to jointly submit the draft regulatory technical standards, based on these amendments, to EC within a period of 12 months following the receipt of the letter—that is, by April 2023.
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Keywords: Europe, EU, Banking, Insurance, Securities, SFDR, Disclosures, Sustainable Finance, Regulatory Technical Standards, ESG, Climate Change Risk, Taxonomy Regulation, ESAs, EC
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