ESAs Joint Consultation paper on Taxonomy-related sustainability disclosures (SFDR RTS): EBF response
14 May 2021
Lack of comparable, reliable and standardized data (including from external data providers) and information necessary both for a complete and correct due diligence and classification of the financial products’ sustainability degree remain a critical issue. Companies will only begin to report their taxonomy alignment in 2022.
The European Banking Federation has
responded to the ESAs Joint Consultation paper on Taxonomy-related
sustainability disclosures (SFDR RTS).
Key message:
- It is not practical for the two
SFDR-RTSs to come into force at different times as templates implemented
from the first RTS would have to be changed when the second RTS
becomes applicable. Since the templates are mandatory, they cannot be
implemented based on the draft of the second RTS, as this would risk
violating the law if the second RTS were delayed. We support ESAs
suggestion of an implementation period of at least six months in terms
of the mandatory use of the templates. European Commission should
consider safeguards in case the RTSs are not finalized early enough to
allow sufficient implementation time. Assuming that the final RTS will
not be published until autumn 2021, at the earliest, it is expected that
full compliance with the first obligations in January 2022 will prove
unrealistic. We would also favor a one-year transition phase where the
best effort approach is allowed. Such an experimental type of
enforcement of one year will benefit both FMPs and their supervisors. It
will allow, but support FMPs to try their best efforts to implement the
regulation on time, without fear of regulatory reprimands.
- While including assets that cannot be
assessed for taxonomy, will not give a thoroughly accurate view of the
composition of the portfolio with regards to the non-taxonomy aligned
share of the portfolio (which could be made of both non-assessable and
non-aligned activities, we do consider this to be appropriate as long as
the meaning of the % is clearly stated and understood by investors. To
provide investors with clarity, it should be made possible for
financial market participants to disclose an additional KPI, which
excludes sovereign bonds and other assets that cannot yet be assessed
for taxonomy-alignment to ensure that funds are not unduly penalized for
investing e.g. in sovereign bonds. The scope of investments taken into
account in this second voluntary indicator will expand progressively as
taxonomy develops. Requiring government reporting, thus the availability
of information on sovereign bonds would also improve reporting. There
should also be a blank explanation field, where the FMPs can describe
the product’s investments and the investments’ relation to the EU
taxonomy in more detail.
- To provide investors with clarity, it
is suggested that financial market participants should clearly state in a
check box solution whether the financial product:
- invests in activities that contribute
to an environmental objective [article 9 products, taxonomy aligned or
non-taxonomy aligned];
- invests in environmentally sustainable investments [=taxonomy aligned];
- promotes environmental characteristics [Article 8 products];
- invests in socially sustainable investments Art. 9];
- promotes social characteristics [Art. 8];
- invests in both environmentally and socially sustainable investments (Article 9, either taxonomy aligned or other);
- promotes environmental and social characteristics (Article 8).
EBF
© EBF
