ESAs Consult on Product Disclosures Aligned with EU Taxonomy Regulation

March 17, 2021 -The European Supervisory Authorities (ESAs) launched Consultation Paper on draft Regulatory Technical Standards (RTS) on disclosures of financial products investing in economic activities that qualify as environmentally sustainable. These economic activities are defined by the EU Taxonomy Regulation (EU) 2020/852. The deadlines for the taxonomy-related product disclosures RTS range from 1 June 2021 to 1 June 2022.

In order to minimise duplication, the ESAs have agreed to amend the draft Sustainable Finance Disclosure Regulation (SFDR) RTS, instead of delivering a new regulation. The ESAs plan to establish the RTS on disclosures rules as a “single rulebook” for sustainability disclosures for both the original empowerments in SFDR and the additional ones added by Taxonomy Regulation.

The disclosures should include information on “how and to what extent” the economic activities the product invests in qualify as environmentally sustainable under the Taxonomy Regulation.

The ESAs propose that the “extent” to which economic activities invested in qualify as environmentally sustainable should be shown as a graphical representation. This key performance indicator (KPI) of the ‘extent’ should show the taxonomy-aligned investments as a weighted average of all investments.

The “how” information will represent a statement that the investments underlying the financial product are made in environmentally sustainable economic activities and comply with the four criteria of Article 3 of the Taxonomy Regulation. However, it is necessary also to disclose whether that statement has been assessed by a third party.

The consultation will be open until 12 May 2021.

For more information please visit: EBA website

Jurisdiction: European Union

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