There was a significant development on 21st April with the publication of the draft of the first Delegated Act of the EU Taxonomy Regulation. The Taxonomy establishes a classification system for environmentally sustainable economic activities. As we have previously covered, this is applied to the financial services sector via the EU Sustainable Finance Disclosure Regulation (SFDR). This came into effect on 10th March and has an impact at both the firm and product level.

 

The Taxonomy Regulation from June 2020, which came into force on 12th July 2020, can be found here.

 

The draft Delegated Act can be found here and the annexes that actually provide the screening criteria, here and here.

 

The EU has provided a helpful graphic that shows how the Taxonomy links in to the SFDR, which can be found here.

 

Although the UK had originally planned to adopt the SFDR, this was dropped last year. The UK intends to adopt its own rules.

 

The detail of the reporting under the SFDR is in a Regulatory Technical Standard (RTS) that was published in theoretically final form on 4th February. As covered in our previous newsletter, on 17th March, the the three European Supervisory Authorities (EBA, EIOPA and ESMA) published a consultation on amending the draft RTS to bring it in line with the disclosure requirements of the broader EU taxonomy. You can find it here. This consultation ran until 12th May. We contributed to the AREF SFDR working group which has drafted a response and has also fed into the INREV response. Both have concentrated on seeking clarification of the proposed disclosures for real estate under the RTS.

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