On June 13th, the European Commission presented a comprehensive package of measures to strengthen and improve the EU framework for sustainable finance. It proposes extending the EU taxonomy and introducing new rules for environmental, social and governance (ESG) rating providers.
A key part of the sustainable finance framework will be the new criteria for economic activities contributing to non-climate environmental objectives such as water and marine resource conservation, circular economy transition, pollution prevention, and biodiversity protection. In terms of climate change, the taxonomy should take even greater account of the manufacturing and transport sectors in particular.
The proposed regulation for ESG ratings providers aims to enhance reliability and transparency in the EU market for sustainable finance. The regulation will require authorization and supervision by the European Securities and Markets Authority (ESMA). It is also intended to improve the adoption of the taxonomy. For this purpose, an EU Taxonomy user guide will be provided.
Another focus of the package is the transition of finance within the EU legal framework.
The current state of the resolution process:
The EU Taxonomy Delegated Acts are approved in principle and will undergo scrutiny by the European Parliament and Council before being adopted, expectedly starting from January 2024. Discussions with the European Parliament and Council will also take place regarding the proposed regulation for ESG ratings providers. In addition, the Commission launched a feedback period for sustainability reporting standards, which will ensure transparent and comparable sustainability information for companies subject to the Corporate Sustainability Reporting Directive (CSRD). The Commission will consider feedback and finalize the standards, marking another step towards a sustainable EU economy.
The cleversoft RegWatch team continues to monitor the developments around the proposed measures and will continue to keep you informed. For the moment there is no need for our clients to take any action. However, we are happy to answer any questions you may have about the EU framework for sustainable finance or our ESG services.