The EU Commission published on 6 October 2022 the updated FAQs to clarify the content of the Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 (the “Disclosures Delegated Regulation”) under Article 8 of Regulation (EU) 2020/852 of 18 June 2020 (the “Taxonomy Regulation”) to assist with its implementation. Article 8 of the Taxonomy Regulation applies to undertakings which are subject to an obligation to publish non-financial information according to Article 19a or Article 29a of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, as amended (the “Directive 2013/34”). Therefore, large undertakings which are public-interest entities exceeding on their balance sheet dates the criterion of the average number of 500 employees during the financial year should pay attention to the updated FAQs. Idem for the public-interest entities, which are parent undertakings of a large group exceeding on its balance sheet dates, on a consolidated basis, the criterion of the average number of 500 employees during the financial year. The terms large undertakings and public-interest entities are defined in Directive 2013/34.

The prior version of the updated FAQs dated January 2022 contained 22 frequently asked questions on how financial and non-financial undertakings should report taxonomy-eligible economic activities and assets under the Disclosures Delegated Regulation. The Disclosures Delegated Regulation contains disclosure provisions for non-financial undertakings, assets managers, credit institutions, investment firms, insurance and reinsurance undertakings, as well as disclosure rules common to all financial undertakings and disclosure rules common to all financial undertakings and non-financial undertakings concerning the implementation of Article 8 of Taxonomy Regulation.

The 33 frequently asked questions are separated into the following 9 points:

  • General FAQs;
  • Non-financial undertakings;
  • Financial undertakings;
  • Asset managers;
  • Insurers;
  • Credit institutions;
  • Debt market;
  • Interaction with other regulations;

The EU Commission clarifies the following points in the updated FAQs:

  • How is “Taxonomy-eligible economic activity” defined;
  • How may asset managers weigh their holdings in a portfolio to report Taxonomy-eligible assets?;
  • How to identify Taxonomy-eligible activities of which activity descriptions contain qualifiers, such as ‘low carbon’ and ‘climate-related perils?;
  • How should a credit institution with a Markets in Financial Instruments Directive (MiFID) investment firm license report its Taxonomy-eligible economic activities?;
  • How to assess and report the Taxonomy-eligibility of a debt asset such as a bond or loan?;
  • Can green debt instruments from non-EU entities be reported as Taxonomy-eligible?;
  • Can green sovereign debt be reported as Taxonomy-eligible?;
  • What activities should an insurer and a reinsurer consider when reporting their underwriting activities in the context of Taxonomy-eligibility reporting?; and
  • How does the Disclosures Delegated Regulation interact with the proposed requirements on corporate sustainability reporting (‘the CSRD proposal’)?

The updated FAQ is available here.

Don’t hesitate to contact our banking, finance and capital markets team if you need further information.