ESG Regulations Guide, the EU ESG regulatory regime is comprised of several disparate measures, nearly all of which intersect with the Taxonomy in some way. The most pressing ESG rules for investment firms, however, are those set out in the following three interlinked ESG texts: In summary, the Non-Financial Reporting Directive (NFRD) requires large EU “public interest” corporates (including many financial services firms) to publish data on the impact their activities have on ESG factors. The principles of EU Taxonomy The Taxonomy is based legally on a political agreement reached on December 17, 2019. Investment firms face the challenge of determining which sources of ESG information best align with their investment approach and... Three Reasons Why Fixed-Income Investors Rely on ESG Factors. The EU Taxonomy is a tool to help investors, companies, issuers and project promoters navigate the transition to a low-carbon, resilient and resource-efficient economy. International Headquarters And more importantly, what … The firm needs to feed the analysis into the SFDR disclosures by way of Articles 5 and 6 of the Taxonomy Regulation, which is the principal mechanism through which the regulation makes its presence felt in the world: In many respects, the Taxonomy can be regarded as a very elaborate set of marketing rules. The EU Taxonomy is a tool to help investors, companies, issuers and project promoters plan and report the transition to an economy that is consistent with the EU’s environmental objectives. PART A Explanation of the Taxonomy approach. And for the first time, criteria for climate adaptation have been included, covering 70 economic activities, relying on a risk assessment and a plan to address the risks. Actually, the TEG’s mandate was only to consider the four environmental objectives (pollution prevention and control, use and protection of water and marine resources, circular economy, and protection and restoration of biodiversity and ecosystems) in the context of avoiding significant harm. The taxonomy labels an economic activity as environmentally sustainable if it substantially contributes to at least one of six EU environmental objectives without significantly harming any of the others, and complies with minimum social safeguards. This section sets out the role and importance of sustainable finance in Europe from a policy and investment perspective, the rationale for the development of an EU Taxonomy, the daft regulation and the mandate of the TEG. The report is supplemented by a technical annex containing a full list of revised or additional technical screening criteria for economic activities which can substantially contribute to climate change mitigation or adaptation. To achieve the goals of the EU Green Deal, climate neutrality, sustainable economic growth and inclusion of all countries, a classification system for sustainable activities fulfils a … This could help raise finance for the relevant investments. The review of the Non-Financial Reporting Directive, By 1 June, 2021, the European Commission will adopt a delegated act specifying. The logic behind this claim is that the profusion of overlapping voluntary standards has produced a fragmented landscape that inhibits meaningful comparison between investments, thereby discouraging additional sustainable investments. Mr. Barrie Ingman is a member of FactSet’s Regulatory Solutions Group. Since it will have the force of law and since no other legal frameworks are being developed to compete with it, the EU framework will become the de facto global ESG (gold) standard. The viability of the EU’s ESG regulatory regime had been in … The introduction of the EU Taxonomy is getting closer and the impact will be significant. Whilst the fate of the Taxonomy Regulation hung in the balance, there was still a genuine chance that the ESG regime might wilt on the vine before it had the chance to blossom, especially with Member States publicly challenging the position of their peers on matters ranging from forestry to nuclear power. Such a peculiar naming convention is not uncommon within the EU however, as the “European Markets Infrastructure Regulation” (EMIR) attests (with its official title being “Regulation (EU) No 648/2012 on OTC Derivatives, Central Counterparties and Trade Repositories”). Under the EU taxonomy regulation, large listed issuers have to report on the proportion of their turnover, capital expenditure and operating expenditure related to activities deemed environmentally sustainable under the EU taxonomy framework. The EU Taxonomy is a classification system of environmentally sustainable activities. Finance theme group webinar: ”EU’s Taxonomy Regulation Explained” 19.05.2020 @ 14:00 - 15:00 « CLC Advisory board webinar: Green Deal and CLC’s systemic model -current status and key avtions 2020 Above all, this system should help companies to raise finance for sustainable activities, by encouraging them to publish the percentage of their turnover or investments that is in line with the “green list” of environmentally sustainable activities. Similarly, a few weeks later, the U.S. Department of Labor went further, proposing a rule that would legally oblige fiduciaries to focus on returns over ESG considerations in a measure that, if adopted, would collide head-on with consensus (but not universal) jurisprudence that consideration of ESG factors is also a fundamental obligation of a fiduciary. +852.3710.6100, Support The climate mitigation criteria for 72 economic activities have been updated / completed. NB : Two linked posts : “It must be green ! Specifically, since the broader regime rested to a significant degree on the enactment of the Taxonomy Regulation, which at times looked unlikely to occur, many stakeholders began to question whether the regime would ever “make it over the line,” especially given what appeared at the time to be intractable problems relating to how to classify nuclear power and natural gas from a sustainability perspective, among other issues. The SFDR (as supplemented by the Taxonomy) requires investment firms to disclose: Depending on the rule in question, the relevant SFDR disclosure will appear in one or more of the following locations: on the investment firm’s website, in periodic reports, in promotional material, and/or in pre-contractual documentation. The EU Green Deal is Von der Leyen Commission’s program aiming to make Europe’s economy more sustainable. Mr. Ingman started his career at the Treasury Solicitor’s Department defending Judicial Review applications made against the government, before joining the FCA, where he investigated and brought cases of market abuse. The expanded taxonomy now covers activities in sectors that produce 93% of Europe’s emissions, including activities such as electricity generation, urban transport, crop-agriculture and cement-manufacturing.
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