Before taking a formal position on the environmental performance information that financial and non-financial companies should disclose, the European Commission would first like to take the temperature with stakeholders. On Friday 7 May, it therefore launched a call for comments on its draft delegated act.
Article 8 of the Regulation establishing the EU taxonomy on sustainable finance (see EUROPE 12468/30) provides in fact that companies that are required to publish non-financial information under the Non-Financial Reporting Directive (NFRD) must disclose information to the public on how—and to what extent—their activities are associated with environmentally sustainable economic activities.
To this end, Article 8 requires the Commission to adopt a delegated act to specify the content, methodology and format of the information to be published by companies.
Article 8 already specified the main key performance indicators that non-financial companies will have to disclose. In concrete terms, they will have to indicate the proportion of their turnover, capital expenditure, and operating expenditure resulting from environmentally sustainable economic activities.
Article 8 did not, however, specify equivalent indicators for financial firms, such as large banks, asset managers, investment firms, and insurance and reinsurance companies.
The draft delegated act therefore specifies how they will have to indicate to what extent they finance or invest in environmentally sustainable economic activities.
According to the text, the main key performance indicator for credit institutions would be, for example, the green asset ratio (GAR), which is defined as the proportion of credit institutions’ assets invested in economic activities aligned with the taxonomy in relation to total assets covered.
The delegated act is designed in such a way as to automatically incorporate all future developments of the taxonomy, the Commission also states.
It will also automatically adapt to the changes introduced by the recent Commission proposal on the Corporate Sustainability Reporting Directive (CSRD), which includes an extension of the scope of the NFRD (see EUROPE 12703/10).
Gradual application from 2022
Stakeholders have until 2 June to comment on the draft text. Depending on the feedback, the European Commission will then revise its delegated act. Publication of the final version is currently scheduled for June 2021 and the act is expected to enter into force on 1 January 2022, after a period of review by the European Parliament and the EU Council.
However, the Commission foresees a phased implementation whereby only the share of activities eligible for the taxonomy would first be disclosed from 1 January 2022, as well as some other qualitative information. An intermediate phase would follow in 2023, with more information to be disclosed, before the delegated regulation becomes fully applicable from 1 January 2025.
See the draft text: https://bit.ly/3usBbjl (Original version in French by Marion Fontana)