ESG: Commission consults on new Taxonomy Regulation Level 2 measures

What’s been published?

On 5 April 2023, the European Commission published for consultation a draft Taxonomy Environmental Delegated Regulation and Annexes.

These contain a set of EU Taxonomy technical screening criteria (TSC) for economic activities which make a substantial contribution to one or more of the following environmental objectives:

• the sustainable use and protection of water and marine resources;
• the transition to a circular economy;
• pollution prevention and control; and
• the protection and restoration of biodiversity and ecosystems.

At the same time, the Commission is consulting on a second Delegated Regulation (the Amending Delegated Regulation), which proposes targeted amendments to the Taxonomy Climate Delegated Act, covering the environmental objectives of climate change mitigation and adaptation.

In both cases, the consultation period closes on 3 May 2023.

The final annex on the Commission’s webpage sets out a template for providing feedback on the proposed Delegated Acts.

Next steps?

Once the consultation periods have closed, the Commission will then review the feedback it has received.

It has indicated that it intends to adopt a legislative proposal for a Delegated Regulation in Q2 2023

What do the draft delegated acts contain?

The draft Taxonomy Environmental Delegated Regulation

This would supplement the EU’s Taxonomy Regulation by establishing the TSC to be used to determine:

• the conditions under which an economic activity would qualify as contributing substantially to one of the four environmental objectives set out above; and
• whether the economic activity concerned causes significant harm to any of the other environmental objectives.

The draft Delegated Regulation would also amend the Disclosures Delegated Act made under the taxonomy Regulation in order to:

• align the disclosure requirements in the two pieces of legislation; and
• supplement the requirements in Article 10 of the Disclosures Delegated Act.

The draft Amending Delegated Regulation

This proposes amendments to the Climate Delegated Act by establishing TSC for climate change mitigation and climate change adaptation for economic activities not yet included in that Delegated Act (notably some manufacturing activities in relation to key components for low carbon transport and electrical equipment).

For more information, see our Sustainable Financing and ESG Investment webpages.