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Delegated Regulation incorporating nuclear and gas disclosures into SFDR RTS adopted by European Commission

Endorsing the European Supervisory Authorities’ (ESAs) earlier proposals (see our earlier blog post here), on 31st October, the European Commission updated the technical standards to be used by financial market participants when disclosing sustainability-related information under the Sustainable Finance Disclosures Regulation (SFDR), to add disclosures to provide transparency about investments in taxonomy-aligned gas and nuclear economic activities.

In particular the Delegated Regulation:

  • add a "yes/no" question in the financial product templates set out in Annexes II-V of Commission Delegated Regulation (EU) 2022/1288 (SFDR RTS) to identify whether the financial product intends to invest in those activities; if the answer is "yes", a graphical representation of the proportion of investments in such activities would be required; and
  • implement revisions to the SFDR RTS to correct “inconsistencies” observed after its publication (including a change to Article 55 to remove the pre-condition of “commitment” and instead to simply refer to financial products referred to in Article 6 of the Taxonomy Regulation).

What happens next?

These amendments will now be formally transmitted to the European Parliament and the Council, who will have three months to scrutinise the Delegated Regulation (with it scheduled to enter force on the third day following publication in the OJEU). The Commission Press release is available here and the updated Delegated Regulation is available here.

What about ongoing opposition to the inclusion of natural gas and nuclear energy in the taxonomy?

As we have previously commented on, a number of NGOs have recently asked the European Commission to review the inclusion of natural gas and nuclear in the EU Taxonomy Complementary Climate Delegated Act (CDA) (see this blog post).  If, following an internal legal review, the Commission decides not to repeal/withdraw the Delegated Act, the NGOs have threatened to commence legal proceedings in the Court of Justice of the European Union (CJEU). Furthermore, Austria has brought an action before the CJEU against the Commission for inclusion of nuclear energy and natural gas in the taxonomy (see our blog post here).

Whether any legal challenges are successful remains to be seen – and the nature of the CJEU’s ruling will determine the Commission’s response.  In the meantime, the CDA remains legally valid and is still due to come into force on 1 January 2023, unless and until such time as either the Commission or the CJEU decide to revoke it. As such it is not expected that the legal challenges will impact the EP/Council review and the entry into force of the most recent Delegated Regulation amending the SFDR RTS.