Commission Taxonomy Regulation Notices published in the OJ

On 20 October 2023, the European Commission published two Notices containing frequently asked questions (FAQs) to help the interpretation and implementation of aspects of two Level 2 measures made under the Taxonomy Regulation:

• The TSC Notice concerns the interpretation and implementation of provisions of the Climate Delegated Act, which establishes technical screening criteria (TSC) for economic activities that contribute substantially to climate change mitigation or climate change adaptation and do no significant harm (DNSH) to other environmental objectives

• The Disclosure Notice covers the interpretation and implementation of provisions of the Disclosure Delegated Act made under Article 8 of the Taxonomy Regulation on the reporting of Taxonomy-eligible and Taxonomy-aligned economic activities and assets.

As we reported at the time, the Commission published drafts of the two Notices on 19 December 2022. These have now been published in final form in the Official Journal.

Note that the TSC Notice does not take account of the proposed amendments to the Climate Delegated Act set out in the draft Taxonomy Environmental Delegated Act which the Commission adopted (together with a number of annexes) on 27 June 2023 (see our summary here)

In addition, the Disclosure Notice is intended as an interpretative guide primarily for non-financial undertakings which began reporting their Taxonomy Key Performance Indicators (TKPIs) from 1 January 2023 while a further Notice for financial undertakings will be published in due course when these start reporting their TKPIs from 1 January 2024.

What is in the TSC Notice?

The TSC Notice sets out replies to FAQs on the TSCs for the climate change mitigation and climate change adaptation environmental objectives. These are arranged as follows

Horizontal Questions on:

• process, updates and further development of TSCs and Taxonomy
• scope of economic activities and TSCs set out in the Climate Delegated Act

Sector-specific questions, including on the interpretation of TSCs for a specific economic activity (such as forestry, manufacturing, energy)

DNSH criteria questions - these include generic criteria for DNSH to;

• climate change adaptation
• pollution prevention and control regarding use and presence of chemicals and
• protection and restoration of biodiversity and ecosystems

What is in the Disclosure Notice?

The Disclosure Notice sets out responses to FAQs on the Article 8 disclosure obligation with respect to the Taxonomy-eligibility and alignment reporting. The Disclosure Notice contains FAQs on:

General issues, including

• the envisioned timeline for the application of Taxonomy-related disclosures
• the approach to Taxonomy-related reporting and
• the impact of other EU sustainable finance regulations (e.g., the CSRD) on Taxonomy-related reporting obligations

Turnover KPI
Capital expenditure (or CapEx) KPI and
Operational expenditure (or OpEx) KPI

Next steps

A further notice relating to the Article 8 disclosures by financial undertakings will be published in time for the 1 January 2024 deadline, when financial undertakings begin reporting their TKPIs.

The Commission will also amend the TSC Notice and the Disclosure Notice once the Taxonomy Environmental Delegated Act (containing TSCs on the remaining four Taxonomy environmental objectives along with changes to the existing two) is finalised and published.