European Supervisory Authorities Publish Final Report on Expanded Disclosures under the EU Sustainable Finance Disclosure Regulation

The European Supervisory Authorities (the European Securities and Markets Authority, the European Banking Authority and the European Insurance and Occupational Pensions Authority) have published a new final report and draft Regulatory Technical Standards on disclosures to be made under the EU Sustainable Finance Disclosure Regulation. The EU SFDR was published in December 2019 and the majority of its provisions have applied since March 10, 2021.

The ESAs previously published finalized RTS on disclosures under the EU SFDR in February 2021, which were due to apply from January 1, 2022. However, the EU Taxonomy Regulation has since made amendments to the EU SFDR, which empowered the ESAs to develop further draft RTS on taxonomy-related disclosures. As a result, the ESAs considered it more appropriate to publish a new Final Report with amended, composite draft RTS containing a "single rulebook" for sustainability disclosures under the EU SFDR. The European Commission has written a letter to the European Parliament and Council of the European Union informing them that the new draft RTS will contain all EU SFDR RTS in a single instrument, which is expected to apply from January 1, 2023 (later than the originally anticipated application date of July 1, 2022).

The ESAs' new draft RTS cover the following (in addition to the items in the February 2021 RTS):
 

• A requirement to describe, in pre-contractual and periodic disclosures, the environmental objectives (as listed under the EU Taxonomy Regulation) to which relevant financial products contribute;
• Specifications for describing, in pre-contractual and periodic disclosures, how and the extent to which the economic activities that a given product invests in are environmentally sustainable (by reference to the EU Taxonomy Regulation).

Certain other amendments have also been made to the draft RTS published in February 2021, including amendments to the order and content of certain requirements relating to pre-contractual and periodic disclosures.

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