ON 30 SEPTEMBER 2022, THE THREE EUROPEAN SUPERVISORY AUTHORITIES (THE "ESAS") SUBMITTED THEIR FINAL REPORT ON DRAFT REGULATORY TECHNICAL STANDARDS ("RTS") SUPPLEMENTING THE SUSTAINABLE FINANCE DISCLOSURE REGULATION (THE "SFDR") WITH RESPECT TO INFORMATION REGARDING THE EXPOSURE OF FINANCIAL PRODUCTS TO INVESTMENTS IN FOSSIL GAS AND NUCLEAR ENERGY ACTIVITIES.
Background
On 9 March 2022, the European Commission adopted Regulation (EU) 2022/1214, which (under certain conditions) places nuclear and gas energy activities on the list of economic activities covered by the EU taxonomy. The Commission then invited the ESAs to propose related amendments to the regulatory technical standards detailing the disclosure requirements provided under the SFDR, which were finally adopted on 6 April 2022 (the "SFDR Delegated Regulation").
Content
The proposed amendments are intended to increase transparency on investments in taxonomy-aligned fossil gas and nuclear energy economic activities, in particular on the proportion such investments constitute within all investments and in environmentally sustainable economic activities.
Concerned institutions are required to identify any products that intend to invest in taxonomy-aligned fossil gas and nuclear energy economic activities in the financial product templates of the SFDR Delegated Regulation (via "yes"/"no" answers), and to disclose a graphical representation of the proportion of such investments.
For fossil gas or nuclear energy investments by financial products that are not covered by the EU taxonomy, the ESAs consider the existing disclosures under the SFDR Delegated Regulation to be sufficient.
In addition to the foregoing, the ESAs have also proposed some additional minor technical corrections to the SFDR Delegated Regulation.
Next steps
The European Commission must now analyse the draft RTS proposed by the ESAs in their final report, endorse them within three months of their publication and determine an expected application date. Considering the urgency of amending the disclosure framework, the ESAs proposed that they should enter into force the day after the delegated act is published in the Official Journal, rather than after the standard 20 days.
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