We recently informed on the Taxonomy Regulation and the Climate Delegated Act establishing a classification of environmentally sustainable economic activities substantially contributing to the EU’s objectives on climate change adaptation and mitigation.
Eligible economic activities are expressed in a NACE code for orientation. Each of the eligible economic activities has a performance threshold for substantial contribution which determines whether the activity is aligned with the taxonomy regulation or not. The Commission clarified at a meeting on 27 September 2021 that NACE codes of economic activities at output level were considered in priority in order to avoid double reporting of sustainable economic activities. Thus, for electrical equipment the intermediary economic activities like wholesale were not considered. The Commission will issue Frequently Asked Questions on taxonomy-eligible reporting by December 2021 in collaboration with the European Supervisory Authorities and the Platform for Sustainable Finance.
In July, the Commission adopted the Disclosure Delegated Act specifying the content, the methodology and the presentation of the information to be disclosed in accordance with the Taxonomy Regulation. Non-financial undertakings which have reporting obligations under the Non-Financial Reporting Directive (NFRD), i.e. the largest publicly listed companies, shall disclose the following information:
the proportion of their turn-over derived from products or services associated with Taxonomy-aligned activities.
the proportion of their capital expenditure and the proportion of their operating expenditure related to assets or processes associated with Taxonomy-aligned economic activities.
and in addition to the three above Key Performance Indicators (KPIs), qualitative information referred to in Section 1.2. of Annex I relevant for this disclosure.
The information shall be presented in tabular form as given in Annex II of the Disclosure Delegated Act.
The following time schedule for the implementation of the disclosure obligations for non-financial undertakings applies:
From 1 January 2022 until 31 December 2022 non-financial undertakings shall only disclose the proportion of Taxonomy-eligible and Taxonomy non-eligible activities under the Climate Delegated Act in their total turnover, in their capital and operational expenditure and the qualitative information referred to in Section 1.2. of Annex I.
From 1 January 2023 the KPIs for all 6 environmental objectives, including any accompanying information to be disclosed pursuant to Annex I and II of this Regulation, shall be disclosed.
From 2025 onwards, SMEs in high impact sectors might be included in the mandatory disclosure obligations as it is foreseen in the current debate on the proposal of a Corporate Sustainability Directive, which is revising the NFRD and is in the ordinary legal procedure for adoption by the European Parliament and the Council. For SMEs in other sectors, it would be voluntary. Nonetheless, it may be necessary for SMEs to disclose environmental information as part of a value chain and in the case of borrowing from a bank. The European Commission with the assistance of the European Financial Reporting Advisory Group (EFRAG) is preparing ‘simplified templates’ for SMEs.
The Platform for Sustainable Finance published in August 2021 a draft report concerning priority economic activities eligible for the remaining four non-climate related environmental objectives covering water, circular economy, pollution prevention, and biodiversity & ecosystems. A final report of the Platform for Sustainable Finance is to be presented to the European Commission in November 2021. Based on this report the Commission will propose the delegated act in the first half of 2022.