Brussels, 21 April 2021
On the 21st of April, the EU Commission published its Communication entitled: EU Taxonomy, Corporate Sustainability Reporting, Sustainability Preferences and Fiduciary Duties: Directing finance towards the European Green Deal.
The Communication announces the adoption of the first EU Taxonomy Delegated Act which contains a list of economic activities that comply with the first two objectives of the EU Taxonomy Regulation: climate change mitigation and climate change adaptation.
The role of gas, nuclear and other economic activities in the energy sector are not yet addressed in the first Delegated Act. These topics will be covered in a separate legislative proposal which will be put forward after the completion of a review process on nuclear energy which will be finalized in June 2021.
The first Taxonomy Delegated Act spells out which activities in the transport sector – such as cargo handling in road, rail and (sea)port terminals – can contribute to climate change mitigation. A second DA dealing with the remaining four environmental objectives is expected by the end of the year.
The Communication also presents the EU Commission proposal for a Corporate Sustainability Reporting Directive (CSRD) which serves as a revision of the current Non-Financial Reporting Directive.
This Directive will require companies to report according to mandatory EU sustainability reporting standards. The Commission is proposing to develop standards for large companies and separate standards for SMEs. Due to renewed criteria, the proposed CSRD should apply to an increasing number of companies: to 49.000 as compared to 11.000 at current.
Mandatory reporting requirements under the Taxonomy Regulation will apply for the climate change mitigation and adaptation criteria as of January 2022 and from January 2023 onwards for the other four objectives. These reporting requirements will be applicable to companies that are covered by the current Non-Financial Reporting Directive as well as to those included in the proposed CSRD Directive. The Commission will work on guidance regarding how companies can meaningfully report in the first year considering the existence of certain data gaps.