ESG: Commission adopts a proposal to amend the SFDR RTS

As previously reported, on 30 September, the European Supervisory Authorities (ESAs) published their joint Final Report setting out draft amendments to the Level 2 RTS under SFDR.

These changes were required as a result of the Commission Delegated Regulation (the so-called 'Complementary Delegated Act' or CDA) made under the Taxonomy Regulation, which allows certain fossil gas and nuclear investments to be treated as environmentally sustainable under the Taxonomy, provided that certain conditions are met.

The Final Report set out consequential changes to the SFDR RTS regarding the information that should be provided in pre-contractual documents, on websites, and in periodic reports about a product's exposure to investments in fossil gas and nuclear energy activities.

The European Commission has now considered the ESAs' draft and has adopted a legislative proposal for a new Delegated Regulation, together with annexes.

As with the Final Report, the Commission’s proposal contains a requirement that financial market participants use pie charts to disclose the degree to which investments are in taxonomy-aligned activities. It also clarifies a number of small incorrect references.

The aim is for the amendments to take effect from 1 January 2023, in line with the SFDR RTS themselves.

The proposal has been sent to the Council of the EU and to the European Parliament, which each has three months to scrutinise the contents (though there is nothing to stop them confirming their agreement before the end of that period).