EU Sustainable Finance Disclosure Regulation and EU Taxonomy: Updated Regulatory Technical Standards


On April 6, 2022, the European Commission published the final version of the Regulatory Technical Standards (RTS) supplementing the Sustainable Finance Disclosure Regulation (SFDR), which will apply from January 1, 2023. The RTS will define the new standard for sustainability disclosures in the financial services sector in the EU and complements the provisions of the SFDR and the Taxonomy Regulation. Previously, the Joint Committee of European Supervisory Authorities (ESA) published its updated statement on the application of the SFDR on March 24, 2022. This update results from the postponement of the application of the RTS to January 1, 2023. aims to mitigate the risk of divergent application of the SFDR and Articles 5 and 6 of the Taxonomy Regulations (TR).

RTS final

The final RTS as published by the European Commission on April 6, 2022, consist of a delegated regulation. The RTS set out the details of the implementation of ESG-related disclosure requirements under the SFDR and the Taxonomy Regulation at the entity and product level and include five annexes with templates for key disclosure statements. negative impact, pre-contractual disclosure and periodic reports. The Delegated Regulation will now have to be translated into all official EU languages. However, the European Parliament and the Council have a period of three months from the date of notification of the adoption by the Commission to raise objections to the RTS. As planned, the final RTS should be applicable from January 1, 2023.

ESA Statement

The main points of the update by the ESAs of the prudential statement in the light of the publication of the final RTS by the Commission are:

Transparency under Art. 5 and 6 of the taxonomic regulation

  • The prudential expectation before the application of the RTS is that, to comply with the disclosure requirements of Articles 5 and 6 of the RT, the extent of environmentally sustainable investments (also known as taxonomic alignment ) should be expressed as a percentage at which the underlying investments in the financial product are aligned with the taxonomy. Where the information is not publicly available, estimates should not be used, but financial market participants may rely on equivalent information provided by issuing companies or third-party providers.
  • Prior to the publication of the final RTS, the ESA update indicated that during the interim period, the draft RTS could be used as a reference for the purpose of applying the provisions of the SFDR and the TR. Now that the final RTS are published, it can be expected that financial market participants can use them as a reference during the interim period. In this context, it is important to note that the European Parliament or the Council have the right to object to the final RTS within three months from the date of notification of the adoption of the Commission Delegated Regulation . Nevertheless, the ESAs recommended preparing for the application of the RTS and using the transitional period to do so.

Key Negative Sustainability Impact Statements

  • The ESAs have confirmed that the key entity-level adverse sustainability impact statements set out in the RTS should apply from 1 January 2023. article 4 that on June 30 of each year, market players publish the main statements of negative impact on sustainable development on their website. The first statement should therefore be published no later than June 30, 2023 for a reference period corresponding to the calendar year 2022. Annex I of the final RTS provides a template for these statements, which financial market participants will use.

Timing of application for first periodic disclosures

  • The ESAs have confirmed that they expect all periodic information referred to in Article 11(2) of the SFDR, published or prepared on or after January 1, 2023, to provide additional information provided by Chapter V RTSs. The final RTS provides a template for periodic disclosures in Appendix IV.

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