On 6 July 2021 the European Commission adopted various measures relating to sustainable finance, including a new Sustainable Finance Strategy. These initiatives included a Delegated Act on the information to be disclosed by companies about their sustainable activities, supplementing Article 8 of the EU Taxonomy.
The Delegated Act sets out the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives.
Non-financial companies will be required to disclose the share of their turnover, capital and operational expenditure associated with environmentally sustainable economic activities as defined in the Taxonomy and the Taxonomy Climate Delegated Act adopted on 4 June 2021, as well as any future delegated acts on other environmental objectives.
Financial institutions, including banks, asset managers, investment firms and insurance/reinsurance companies, will have to disclose the share of environmentally sustainable economic activities in the total assets they finance or invest in.
The final version of the Delegated Act incorporated various changes following the consultation period which ended in May 2021. The application of the Delegated Act to financial undertakings has been delayed until 1 January 2024, on the basis that certain exposures and investments of financial institutions may not have been fully reflected in their Key Performance Indicators. The Delegated Act will be revised by 30 June 2024 to include such exposures and investments.
The Delegated Act will be examined by the European Parliament and Council, after which it should apply from 1 January 2022.