There are also significant concerns in the industry as to how the RTS can be complied with in practice in the absence of sufficient data/reports from investee companies. What changed in the final taxonomy RTSThe Final Taxonomy RTS included a number of amendments to the ESAs original proposals, although the final version remains controversial in some respects. Although the precise timing for this is unclear, it is expected by the end of 2021.– It is also expected that the detailed requirements imposed by the RTS for the purposes of the SFDR and the taxonomy product disclosure regime will begin to apply in a phased way, beginning on 1 July 2022 – but this is to be confirmed7.– Although similarly unclear, it is presently expected that the Level 1 requirements under the taxonomy product disclosure regime will begin to apply from 1 January 2022.For further advice on this “timing mismatch” and how it may be managed, please get in touch with your usual A&O contact.4. Final proposed RTS for taxonomy and timingThe ESAs have now published, on 22 October 2021, their final report on this taxonomy-related RTS, amending their original proposals in certain respects and publishing updated templates to be used by relevant firms when making their pre-contractual and periodic disclosures under SFDR and the Taxonomy Regulation (Final Taxonomy RTS)6.The European Commission will now consider the Final Taxonomy RTS and decide whether to endorse it.In terms of next steps:– We understand the Commission proposes to issue both the SFDR RTS and the taxonomy-related RTS in one instrument. This essentially amended the SFDR RTS to cover taxonomy-related 23. To this end, on 15 March 2021, the ESAs published for consultation a draft RTS for the detailed product disclosure regime in the Taxonomy Regulation (Draft Taxonomy RTS)5. After a slightly protracted process, a final report on a draft RTS for SFDR was published by the ESAs on 2 February 2021 (SFDR RTS)4.The ESAs were separately mandated to develop an RTS for the taxonomy-related product disclosure requirements. It will also apply in a phased way, beginning on 1 January 2022.Under SFDR, the European Supervisory Authorities (ESAs) were mandated to develop Level 2 requirements or Regulatory Technical Standards (RTS). Among other things, it introduces a detailed product disclosure regime for products in scope of SFDR, via both directly applicable requirements and amendments to SFDR. How did we get here?The Sustainable Finance Disclosure Regulation 2019/2088 (SFDR) was adopted on 27 November 2019 – it began to apply in a phased way from 10 March 20212.The Taxonomy Regulation entered into force on 12 July 2020, and is formally known as Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment3. what is green vs what is not.This briefing gives a snapshot on what changes were made in the final RTS.For a copy of our previous briefings on the RTS, click here1.2. This sets out the detailed disclosures required to be made by firms to indicate how aligned a relevant product is to the taxonomy – i.e. Speed readAs the start date for the EU Taxonomy Regulation looms, the ESAs have published their final draft of the RTS for the taxonomy’s product disclosure requirements. 1Latest RTS for taxonomy and SFDR – detailed product disclosure regime29 November 20211.
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