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A proposal for a regulation to establish a framework to facilitate sustainable investment. The proposed regulation establishes the conditions and the framework to create, over time, a unified classification system (or taxonomy) on what can be considered environmentally sustainable economic activities. This is widely seen as a first and essential enabling step in the overall effort to channel investments into sustainable activities.
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EU Disclosure Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector. The regulation sets out harmonised rules for how financial firms and advisers should report on how their processes take account of sustainability risks and adverse sustainability impacts, as well as the way in which they communicate sustainability-related information about their products. The Disclosure Regulation entered into force on 29 December and will apply from 10 March 2021.
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The low-carbon benchmarks regulation was published in November 2019, amending the benchmark regulation. The amendment creates a new category of benchmarks, comprising low-carbon and positive carbon impact benchmarks, to help investors better understand the relative carbon impact of their investments.
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The Non-Financial Reporting Directive (NFRD). The NFRD requires companies above a certain size to include a nonfinancial statement as part of their annual public reporting obligations. It is applicable to large Public Interest Entities with more than 500 employees. Companies have to disclose information about their business model, policies (including implemented due diligence processes), outcomes, risks and risk management (including risks linked to their business relationships), and KPIs relevant to the business.
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In addition, ESMA solicited feedback on amendments to delegated acts under the Markets in Financial Instruments Directive (MiFID II) and the Insurance Distribution Directive to include ESG considerations into the advice that investment firms and insurance distributors offer to their clients.
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The EU Banking supervisory authorities (ECB and EBA) are issuing guidelines on the integration of ESG and climate risk into risk management and risk governance processes for lending institutions.