Sustainable finance: Taxonomy update

On 1 January 2022, certain obligations resulting from the EU Taxonomy Regulation became applicable, affecting various players in the financial sector and beyond. Two delegated acts further defining its implementation were published early December and became applicable as of 1 January 2022.

The Taxonomy Regulation has established a classification system enabling the categorisation of economic activities that play key roles in contributing to at least one of six defined environmental objectives, and no significant harm done to the other objectives. The six objectives include climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. It has also introduced additional disclosure obligations for financial products within the meaning of the Sustainable Finance Disclosure Regulation ("SFDR"). In addition, it has reinforced disclosure requirements resulting from the Non-Financial Reporting Directive ("NFRD").

You can read about the latest developments around the EU Taxonomy Regulation's delegated acts as well as an update on the timing of the adoption of the SFDR/Taxonomy level 2 Regulatory Technical Standards in the Asset management and investment funds section of this Newsletter under this link.