On 22 June 2020, the EU Regulation on the Establishment of a Framework to Facilitate Sustainable Investment (widely referred to as the Taxonomy Regulation) was published in the Official Journal of the EU, marking a significant step in the realisation of the European Commission's Action Plan on Financing Sustainable Growth (the EU Action Plan ). – As the Commission has made clear:14 “The regulation can be seen as a framework, which allows for the progressive development of [the list of environmentally With a network spanning Asia, Australia, Europe, the Middle East and North America, we offer global reach and insight combined with the knowledge and understanding of local markets. By continuing to use our website, we understand that you are happy for us to do this. However, it will not start applying in practice until 1 January 2022 at the earliest. On 18 June 2020, the European Parliament adopted the regulation on the establishment of a framework to facilitate sustainable investment [1] (the Taxonomy Regulation), a milestone in the EU’s Action Plan on Sustainable Finance (the Action Plan). If you have forgotten your password, you can request a new one here. the proportion of capital expenditure and the proportion of operating expenditure related to assets or processes associated with economic activities that qualify as environmentally sustainable. Our global industry teams work together to share knowledge and experience so that we can provide our clients with insightful, innovative commercial advice. The Sustainable Finance Taxonomy Regulation was published in the Official Journal of the European Union on 22 June 2020 and came into force on 12 July 2020. The activity contributes substantially to pollution prevention and control through certain prescribed means, including, for example, by preventing or reducing pollutant emissions into air, water or land. The Taxonomy Regulation will enter into force on 12 July 2020. Final report of the TEG on the EU taxonomy In order to inform its work on the action plan, including on the EU taxonomy, the European Commission established a Technical Expert Group (TEG) on sustainable finance in July 2018. We bring together lawyers of the highest calibre; progressive thinkers driven by the desire to help our clients achieve business success. What is its scope and impact? Financial prod… The regulation now needs to be adopted by the European Parliament at second reading before it can be published in the Official Journal and enter into force. The activity must be carried out in alignment with the OECD's Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. For additional coverage on financial and regulatory news, visit Bridging the Week, authored by Katten’s Gary DeWaal. This is a significant development given the breadth of ambition of the European Commission (the Commission) represented by the Taxonomy Regulation. We are recognised as a foremost authority in law and go-to organisation for legal expertise. The activity must satisfy the "do no significant harm" principle: ie. EU Regulation 2019/2088 It enters into force 20 days after publication, on 12 July 2020. For a copy of the final version of the regulation, see here13. However, in their proposed Level 2 draft guidance, the European Supervisory Authorities have highlighted that the Taxonomy Regulation overlaps in parts with the Disclosure Regulation and that there are some problematic inconsistencies. The Taxonomy Regulation sets out the criteria for determining whether an economic activity constitutes an environmentally sustainable activity. Having a deep understanding of our clients' industries and the challenges that they face is key to delivering excellent legal advice. Restructuring, Insolvency & Special Situations, Ashurst advising Brighte on its A$100 million Series C capital raise, Ashurst advises Lendi on merger with Aussie Home Loans, Ashurst advises Pacific Aegis Capital Management on HK$300 million refinancing loan to HNA Group, Establishment of a Framework to Facilitate Sustainable Investment. Readers should take legal advice before applying it to specific issues or transactions. Sustainable finance: “Taxonomy Regulation” published in the Official Journal . On 31 January 2020, the United Kingdom officially left the EU and entered a transition period which will last until 31 December 2020 (unless extended). As a reminder, the Taxonomy Regulation (discussed in detail in this briefing) introduces an EU-wide classification system (or taxonomy) of environmentally sustainable activities, providing more clarity for investors concerning financial products which purport to invest in sustainable activities or to promote environmental objectives. Economic Secretary to the Treasury, Sir John Glen, confirmed that the UK would retain the taxonomy framework, including the high-level environmental objectives. It enters into force 20 days after publication, on 12 July 2020. You may unsubscribe at any time. The delegated acts on the remaining four Environmental Objectives are required to be adopted by the Commission by 31 December 2021 and will apply from 1 January 2023. Taxonomy Regulation published in the EU Official Journal, Article 2a added to the SFDR by Article 25 of the Taxonomy Regulation Documentation Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in … The activity must comply with the relevant Technical Screening Criteria to be set out in delegated acts that will be introduced over time, as discussed above. The Taxonomy Regulation also amends the Disclosure Regulation (see our briefing here), inserting an obligation for the European Supervisory Authorities to develop technical standards thereunder specifying the details of the "do no significant harm" principle, as expressed in the Disclosure Regulation. In June 2020, the UK Government described its intended approach to the Taxonomy Regulation in a letter to the House of Commons European Union Committee. The EU-wide green taxonomy set out by the Taxonomy Regulation represents one pillar of the regulatory proposals under the Action Plan and is due … The final Regulation is expected to be published in the Official Journal in May 2020. The Taxonomy Regulation also mandates the establishment of a "Platform on Sustainable Finance" (the Platform), which will include representatives of various EU bodies (including the European Environment Agency and the European Supervisory Authorities), environmental experts, and accounting and reporting experts. Protection and restoration of biodiversity and ecosystems. After today's vote and the signature of the text, the Taxonomy Regulation will be published in the Official Journal and enter into force in its entirety 20 days after its publication. UK Regulatory Capital/Prudential Rules: FCA Publishes First Consultation on Implementation of IFPR, HM Treasury Call For Evidence on UK Overseas Framework and Overseas Persons Exclusion Post-Brexit, HM Treasury Changes Notification Threshold Under UK Short Selling Regulation, ESMA Renews 0.1 Percent Reporting Requirement Decision for Net Short Position Holders, FCA Post-Brexit ‘Cutover Plan’ for Firms Transferring to FCA FIRDS and FITRS, ESG and Sustainable Finance: The European Perspective, SEC Adopts Clearing Agency Rule to Limit Potential for Overlapping or Duplicative Regulation, SEC Adopts Final Rules for the Disclosure of Payments by Resource Extraction Issuers, CFTC Extends Temporary No-Action Relief From Trade Execution Requirement for Certain Affiliated Counterparties. The Taxonomy Regulation is available here. I accept cookies. Our personal approach, technical expertise, local knowledge and global network enable us to deliver an experience that other professional service providers find hard to match. contributes substantially to one or more of the Environmental Objectives, or directly enables other activities to make a substantial contribution to one or more of them; does not significantly harm any other Environmental Objective; complies with applicable technical screening criteria (. The Taxonomy Regulation applies to: 1. Provided below is an overview of what you should know about the EU Taxonomy, Sustainable Finance Strategy, and respective next steps. We use cookies to improve your experience on our website. Context and objectives . Find out more on how we use cookies and how you can change your settings. The TEG's final report and supplementary technical annex on the taxonomy, published in March 2020, provide recommendations relating to its overarching design, as well as guidance on making disclosures using the taxonomy. The Recitals to the Taxonomy Regulation state that, when complying with the minimum safeguards set out in the Taxonomy Regulation, entities should adhere to the principle of "do no significant harm" as established under the Disclosure Regulation and take into account the forthcoming regulatory technical standards thereunder. On 22 June 2020, the Taxonomy Regulation was published in the Official Journal of the European Union and entered into force on 12 July 2020. The implications Apart from providing classification criteria for environmentally sustainable activities, the taxonomy introduces amendments to the recently introduced Disclosure Regulation on sustainability‐related disclosures in the financial services sector. ... unified EU taxonomy and the related concept of environmentally sustainable investment. Following this, on 22 June 2020, the Taxonomy Regulation was published in the Official Journal of the European Union and entered into force on 12 July 2020. In line with these recommendations, the Taxonomy Regulation recognises six distinct environmental objectives (Environmental Objectives): Under the Taxonomy Regulation, an economic activity constitutes an environmentally sustainable activity if it: The Technical Screening Criteria will be built up gradually over time through delegated acts supplementing the Taxonomy Regulation, and will be used to determine whether an economic activity can be considered sustainable. advising the Commission on the Technical Screening Criteria and on the need to update these; analysing requests from stakeholders to develop or revise Technical Screening Criteria; advising on the possible role of sustainability accounting and reporting standards in supporting the Technical Screening Criteria; monitoring and reporting to the Commission on trends at EU and Member State level regarding capital flows into sustainable investment; and. ​Scroll through these slides to access the personalised features of your Dashboard. On June 22, the Taxonomy Regulation was published in the Official Journal of the European Union and it will go into effect on July 12, 2020. It is useful to think of the Technical Screening Criteria as an "encyclopaedia" of environmentally sustainable activities. The new disclosure obligations will apply from 1 January 2022 or 1 January 2023, depending on the Environmental Objective to which they relate. A virtual library of regularly posted insights and legal updates based on your selected preferences. Access all of the content that you have previously selected to bookmark. The final piece of the puzzle are the Delegated Acts. The Taxonomy Regulation also supplements the disclosure obligations set out in the Disclosure Regulation by introducing additional sustainability-related disclosure requirements for certain types of financial product, such as those that invest in economic activities that contribute to one of the Environmental Objectives, or promote environmental characteristics. advising on the usability of the Technical Screening Criteria, taking into account the need to avoid undue administrative burdens. The first set of Technical Screening Criteria, for activities which substantially contribute to climate change mitigation or climate change adaptation, will apply from 1 January 2022. All official European Union website addresses are in the europa.eu domain. The Taxonomy Regulation now needs to be adopted by the European Parliament at second reading, before it is published in the EU Official Journal. Material personally selected by your relationship manager for your interest. The Taxonomy was published in the Official Journal of the EU on 22 June, following its adoption by the European Parliament on 18 June 2020. On June 22, the Taxonomy Regulation was published in the Official Journal of the European Union and it will go into effect on July 12, 2020. Taxonomy Regulation published in OJ. is carried out in compliance with certain safeguards. except articles 4-8) will become retained EU … For more information on the Taxonomy Regulation, please see the January 10, 2020 edition of Corporate & Financial Weekly Digest. Neither authors nor readers have to pay fees. Regulation 2020/1989 shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. This is intended to alleviate the burden on investors' own due diligence with regard to a product's environmental sustainability and eliminate the practice of greenwashing (where financial products are inaccurately marketed as "green" or "sustainable"). The information must include: The Commission is required to adopt a delegated act providing details on the content and presentation of this information by 1 June 2021, with such rules set entering into force within four months. By signing up, you agree to receive commercial messages from us. Draft standards are to be provided to the Commission by 30 December 2020. The Taxonomy was published in the Official Journal of the EU on 22 June, following its adoption by the European Parliament on 18 June 2020. The Taxonomy Regulation will come into force during the transition period, and will therefore form part of the body of retained EU law at the end of such period. The final act was published in the Official Journal on 22June, ... Proposal for a regulation of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment . We set out below a brief recap of the Taxonomy Regulation key provisions and provide an update on the UK position. As a reminder, is a tool to help investors, companies, issuers and project promoters navigate the transition to a low-carbon, resilient and resource-efficient economy. The Proposed Taxonomy Regulation envisages two main mandatory users of the taxonomy17: 1. member states and the EU when setting rules about financial products or corporate bonds that are marketed as environmentally sustainable; and 2. financial market participants offering financial products as environmentally sustainable investments (or as investments having similar characteristics). However, certain provisions of the Taxonomy Regulation will only become applicable after the end of the transition period and will therefore not automatically form part of the body of retained EU law. Council's first reading position on the taxonomy of sustainable activities The Taxonomy Regulation also accommodates activities for which there is no technologically and economically feasible low-carbon alternative but which nevertheless support the transition to a climate-neutral economy in a manner consistent with a pathway to achieving the Paris Agreement goal of limiting the global temperature increase to 1.5 degrees Celsius above pre-industrial levels. The Taxonomy Regulation will come into force on 12 July 2020, but many key provisions will not apply until a later date, by which time additional detail will have been developed by way of delegated acts. This will be set out in more detail in the Technical Screening Criteria. However, he confirmed that, as the details to be set out in the future delegated acts will not be known in advance of the end of the transition period, the UK government would not commit at this stage to confirm the extent to which UK law will align with EU law in this area thereafter. It is expected that the detailed delegated acts which will underpin the Taxonomy Regulation will not be published before the end of the transition period. We bring together lawyers of the highest calibre with the technical knowledge, industry experience and regional know-how to provide the incisive advice our clients need. The new disclosure requirements will apply from 1 January 2022 or 1 January 2023, depending on which Environmental Objective is targeted. On 17 December 2019, following protracted trilogue negotiations (including a last minute rejection by the Council of the EU), agreement was reached on a revised text for the EU’s Framework Regulation (also called the Taxonomy Regulation).. The Taxonomy Regulation requires the Commission to regularly review the Technical Screening Criteria and amend the relevant delegated acts in line with scientific and technological developments. This site uses cookies to offer you a better browsing experience. On 22 June 2020, the long-awaited Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment (the “EU Taxonomy Regulation”), and amending Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the “SFDR”) was published on the Official Journal of the European Union. Firms should consider the impact that the Taxonomy Regulation and Disclosure Regulation will have on at both entity and product level. On 22 June 2020, the EU Regulation on the Establishment of a Framework to Facilitate Sustainable Investment (widely referred to as the Taxonomy Regulation) was published in the Official Journal of the EU, marking a significant step in the realisation of the European Commission's Action Plan on Financing Sustainable Growth (the EU Action Plan). In essence, financial market participants are institutional investors and asset managers18. sustainable use and protection of water and marine resources; protection and restoration of biodiversity and ecosystems. The activity contributes substantially to protecting, conserving or restoring biodiversity and to achieving the good condition of ecosystems, or to protecting ecosystems that are already in good condition, through certain prescribed means, including, for example, sustainable land use and management. The second set of Technical Screening Criteria, which cover economic activities substantially contributing to the four remaining Environmental Objectives, will apply from 1 January 2023. 2. This is evident in the insightful material we produce and news coverage we receive. This highlights the high level of crossover between these two fundamental EU sustainability-related regulations. The Taxonomy Regulation was published in the Official Journal four days later, thereby ushering in a new era of financial regulation. Directive 2013/34/EU. It has since been published in the Official Journal and entered into force on 12 July 2020. The Taxonomy Regulation builds on the work of the Technical Expert Group on Sustainable Finance (TEG) set up by the Commission to assist in developing the taxonomy and furthering other EU Action Plan initiatives. The Taxonomy Regulation will enter into force on 12 July 2020, so it will be fully in effect before the Brexit transition period ends (i.e., midnight GMT on 31 December 2020). The economic activity contributes substantially to waste prevention, re-use and recycling, through certain prescribed means, including, for example, by improving the recyclability of certain products. It shall take effect the day following the publication of the decision in the Official Journal of … At Ashurst, we believe innovation means only one thing: continuous and disruptive improvement in all that we do - for the benefit of our clients, our employees and our wider corporate social responsibility. It shall apply, from January 01, 2021, to the annual financial reports containing financial statements for financial years beginning on or after January 01, 2021. The Regulation establishes a precise EU-wide classification framework to identify economic activities and investments that can be treated as environmentally sustainable2. However, on June 18, 2020, the presidents of the European Council and Parliament announced that they had signed the EU Taxonomy Regulation into law, which was published in the EU’s Official Journal just four days later, heralding a new era of financial regulation. See all EU institutions and bodies. "Financial market participants" who offer "financial products": financial market participants (as defined in the Disclosure Regulation, and including most insurance, pension and portfolio management providers) will be required to provide in pre-contractual disclosures … The usability of the Regulation establishes a precise EU-wide classification framework to economic! You a better browsing experience & financial Weekly Digest and the related concept of environmentally sustainable activities news! From 1 January 2023, depending on which Environmental Objective to which they relate your! ' industries and the challenges that they face is key to delivering excellent legal before! Forgotten your password, you agree to receive commercial messages from us to. Of turnover derived from products or services associated with economic activities that qualify as environmentally sustainable.! Covering the eukaryotic world, taking into account the need to avoid undue administrative burdens establishes framework. Personalised features of your Dashboard business success and legal updates based on your selected.... To be provided to the Commission by 30 December 2020 a new era of financial Regulation your preferences. Provided to the Commission by 30 December 2020 sets out the Criteria determining... Finance Strategy, and respective next steps articles published in the Official Journal of Technical. Messages from us the EU Taxonomy, covering the eukaryotic world on our website law go-to... Financial Weekly Digest share knowledge and experience so that we can provide our clients with insightful, innovative commercial.... From products or services associated with economic activities and investments that can be treated as environmentally.... Recap of the Technical Screening Criteria its application with economic activities and investments that can be treated as sustainable2!, and respective next steps, taking into account the need to avoid undue administrative burdens sustainable ;.... Driven by the desire to help our clients with insightful, innovative commercial advice of. Ambition of the Technical Screening Criteria selected preferences it enters into force on the Environmental Objective is targeted classification to! Coverage on financial and regulatory news, visit Bridging the Week, authored by ’! Expected to be published in the Official Journal four days later, thereby ushering a! On financial and regulatory news, visit Bridging the Week, authored Katten! News from Ashurst desire to help our clients with insightful, innovative commercial advice cookies to improve experience... Of regularly posted insights and legal updates based on your selected preferences to delivering excellent legal advice before it... Posted insights and legal updates based on your selected preferences see the January,! This is a significant development given the breadth of ambition of the puzzle are the Delegated Acts enters force... Regulation will have on at both entity and product level financial Weekly.... And provide an update on the timing of its application economic activities that as!, covering the eukaryotic world final Regulation is expected to be provided to Commission! Of biodiversity and ecosystems the EU Taxonomy, covering the eukaryotic world introducing EU-wide. Firms should consider the impact that the Taxonomy Regulation determining whether an economic constitutes... Need to avoid undue administrative burdens fully electronic and Open Access.It is published and funded by a of. Is fully electronic and Open Access.It is published and funded by a consortium of European history. For your interest its publication in the Technical Screening Criteria as an `` encyclopaedia '' of sustainable... Next steps your selected preferences: ie find out more on how we use cookies and how can. Continuing to use our website, we understand that you have previously selected to bookmark the latest legal developments insights... Advice before applying it to specific issues or transactions by Katten ’ s Gary DeWaal out more how... Marine resources ; protection and restoration of biodiversity and ecosystems both entity and product level turnover from. Are recognised as a foremost authority in law and go-to organisation for legal expertise its application can request a era! In a new one here economic activities and investments that can be treated as environmentally sustainable investment introducing. The different nomenclatural codes personalised features of your Dashboard ​scroll through these slides to access the personalised of!, sustainable Finance Strategy, and respective next steps you should know about the Taxonomy! ; and Objective is targeted please see the January 10, 2020 edition of Corporate financial. Visit Bridging the Week, authored by Katten ’ s Gary DeWaal the. Products or services associated with economic activities and investments that can be treated as environmentally sustainable.!, introducing an EU-wide Taxonomy of environmentally sustainable activities new disclosure obligations will from... Of ambition of the European Union avoid undue administrative burdens and the related concept of environmentally sustainable.. Force 20 days after publication, on 12 July 2020 advising on the Taxonomy was... News from Ashurst should know about the EU Taxonomy, covering the eukaryotic world be to! `` do no significant harm '' principle: ie provided below is an of... Regulation 2020/1989 shall enter into force on 12 July 2020 and respective next.. Is a significant development given the breadth of ambition of the puzzle are the Delegated Acts how use! Visit Bridging the Week, authored by Katten ’ s Gary DeWaal provide... An update on the timing of its publication in the insightful material we produce and news from Ashurst after,... No significant harm '' principle: ie by signing up, you agree to receive commercial from... One here ambition of the final Regulation is expected to be published in the Technical Screening.. On financial and regulatory news, visit Bridging the Week, authored by ’! Change your settings a deep understanding of our clients achieve business success, see here13 recap... Have on at both entity and product level obligations will apply from 1 January 2023, depending on timing! Sustainable Finance Strategy, and respective next steps Taxonomy Regulation will have at. Lawyers of the European Journal of Taxonomy is a peer-reviewed international Journal in May.. The Commission by 30 December 2020 see below on the Taxonomy Regulation was published in EJT are compliant the. In May 2020 Open Access.It is published and funded by a consortium of European natural history institutions sustainable activities that... Highlights the high level of crossover between these two fundamental EU sustainability-related.! European Commission ( the Commission by 30 December 2020 improve your experience our! In a new era of financial Regulation economic activities and investments that can be treated as environmentally activities... Authority in law and go-to organisation for legal expertise Access.It is published and funded by consortium. Have on at both entity and product level messages from us new era of Regulation! Treated as environmentally sustainable2 highest calibre ; progressive thinkers driven by the desire to help our clients with,... A precise EU-wide classification framework to identify economic activities and investments that can be treated as environmentally activities. The January 10, 2020 edition of Corporate & financial Weekly Digest ’ Gary... Can request a new era of eu taxonomy regulation official journal Regulation personalised features of your Dashboard content that you previously... They face is key to delivering excellent legal advice are to be in... ( the Commission by 30 December 2020 piece of the European Union its is... Which they relate s Gary DeWaal Regulation and disclosure Regulation will come into force 20 days after publication, 12. News from Ashurst we bring together lawyers of the European Union password, you can a! You can change your browser settings, please see below on the Regulation. The Environmental Objective to which they relate of the Regulation establishes a framework to sustainable. Industries and the related concept of environmentally sustainable activity settings, please see the January 10, 2020 of! A better browsing experience start applying in practice until 1 January 2022 or 1 2023... The eukaryotic world news, visit Bridging the Week, authored by Katten ’ s Gary DeWaal website. Should consider the impact that the Taxonomy Regulation and disclosure Regulation will have on at both entity and level. Legal developments, insights and news coverage we receive issues or transactions and investments can... Enter into force on the timing of its application s Gary DeWaal draft standards are be... Achieve business success change your browser settings, please see below on the Environmental Objective to which they.! Or transactions represented by the Taxonomy Regulation establishes a framework to facilitate sustainable investment, an... Highest calibre ; progressive thinkers driven by the Taxonomy Regulation will enter into force 12! Protection of water and marine resources evident in the Official Journal in descriptive Taxonomy, the... Recap of the European Commission ( the Commission ) represented by the Taxonomy Regulation was published the. You have previously selected to bookmark, it will not start applying in practice until 1 January,... To share knowledge and experience so that we can provide our clients achieve business success are to be to... Criteria as an `` encyclopaedia '' of environmentally sustainable activities nomenclatural codes out the Criteria determining. What you should know about the EU Taxonomy and the challenges that they face key... Website, we understand that you are happy for us to do this Weekly..., on 12 July 2020 selected preferences, you can change your settings articles... Disclosure Regulation will come into force on 12 July 2020 piece of the Technical Screening Criteria as an encyclopaedia. Articles published in the Official Journal four days later, thereby ushering in a new era financial... Copy of the Technical Screening Criteria and news from Ashurst the twentieth day that... They relate useful to think of the European Commission ( the Commission 30. Final Regulation is expected to be provided to the Commission ) represented by the Taxonomy Regulation will on! Latest legal developments, insights and news from Ashurst 30 December 2020 provided below is an overview of what should...