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

    US Regulators Release Stress Test Scenarios for Banks

    The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).

    February 28, 2024 WebPage Regulatory News
    News

    Asian Governments Aim for Interoperability in AI Governance Frameworks

    The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.

    February 28, 2024 WebPage Regulatory News
    News

    EBA Proposes Operational Risk Standards Under Final Basel III Package

    The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.

    February 26, 2024 WebPage Regulatory News
    News

    EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS

    The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.

    February 23, 2024 WebPage Regulatory News
    News

    ECB to Expand Climate Change Work in 2024-2025

    Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.

    February 23, 2024 WebPage Regulatory News
    News

    BIS Bulletin Examines Cognitive Limits of Large Language Models

    The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.

    January 25, 2024 WebPage Regulatory News
    News

    ECB is Conducting First Cyber Risk Stress Test for Banks

    As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.

    January 24, 2024 WebPage Regulatory News
    News

    EBA Continues Momentum Toward Strengthening Prudential Rules for Banks

    A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.

    January 24, 2024 WebPage Regulatory News
    News

    EU and UK Agencies Issue Updates on Final Basel III Rules

    The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards

    December 19, 2023 WebPage Regulatory News
    News

    Industry Agency Expects Considerable Uptake for Swiss Climate Scores

    The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.

    December 18, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8952