Autore: Dott. Enea Franza



The first Action Plan adopted by the Commission on sustainable finance dates back to March 2018, which included a series of key actions aimed at achieving the objectives of redirecting capital flows towards a more sustainable economy, integrating sustainability in the management of risk and promote transparency and long-term initiatives (1). Consequently, in the following May, the Commission published a package of three proposals for regulations that are considered the building blocks of the 2018 Plan: the regulation on taxonomy, the regulation on disclosure relating to sustainable investments and on sustainability risks (SFDR Regulation ) and the regulation on a new category of benchmarks that includes low carbon emissions and positive carbon impact. The proposed regulations on disclosure and benchmarks were adopted in November 2019, while the proposed regulation on taxonomy was adopted and published in June 2020. A further pillar of the 2018 plan is represented by the proposed directive on Corporate Sustainability Reporting published by the Commission on 21 April 2021 (2).

To these initiatives, the European Commission, on 6 July last, brought a new package of measures that includes both a new strategy for consolidating the framework of sustainable finance (in the intentions) capable of better mobilizing the EU financial system to ensure the capital necessary for the transition to a sustainable economy (3), that a new European regulation for green bonds to overcome the excessive fragmentation of the market, the absence of standardization and the difficulty of comparing green bond issues, as well as the risk of distortion of the investment decisions of investors attentive to sustainability profiles

In addition, a Commission delegated act has been adopted supplementing Article 8 of the Taxonomy Regulation and specifying the content, methodology and presentation of the information that large companies, financial and non-financial, must communicate on the share of their commercial activities., investment or loan aligned with the EU taxonomy.



2.1 The strategy

The strategy decided on July 6 u.s. for sustainable finance (henceforth "new strategy"), the Commission's intention is to complete the reference regulatory framework to support the complex qualitative transformation of the structure of the European economy. The key idea is that the financial system can be the primary lever in order to achieve the objectives of the European Green Deal and favor the recovery of the EU affected by the COVID-19 pandemic, redirecting private capital flows towards green investments and incorporating a sustainable corporate governance culture in the private sector (4).

The "new strategy" of the Commission, therefore, partially integrates when already decided with the previous Action Plan, but is characterized (in the intentions of the same) by a greater incisiveness. It identifies six priority intervention areas: facilitating the financing of the transition of the economy towards sustainability; improve the inclusiveness of small and medium-sized enterprises (in short, SMEs) and investors; to strengthen the resilience of the economic and financial system to climate risks and to the additional risks affecting sustainability; increase the contribution of the financial sector to sustainability; ensure the integrity of the EU financial system and monitor its orderly transition towards sustainability; promote the development of international initiatives and standards.

The initiatives included in each area are illustrated below.

The EU taxonomy (5) represents a key tool to help investors and companies plan the transition, reorienting production assets and consumption behaviors towards a rational and responsible use of natural resources and manufactured goods. The taxonomy has the dual role of clarifying the classification of economic activities that can be defined, in fact, "sustainable" for the environment and of guiding the certainly complex path of the transition towards a less invasive way of producing. for the environment. In fact, the taxonomy specifies the activities that will continue to survive in the context of an economy with "net zero emissions" in 2050, identifying target sectors whose contribution is crucial for triggering climate change mitigation and adaptation processes.

That said, the "new strategy" envisages, first of all, considering expanding the taxonomy to economic transitional activities, in order to mobilize capital to finance economic activities which, while not substantially contributing to the achievement of environmental objectives, are however on a credible path towards sustainability. At the same time, it is planned to publish by 2021, on the basis of the advisory of the Platform on Sustainable Finance (6), a report on the future extension of the taxonomy to activities that are significantly harmful to environmental sustainability and to those that do not have a significant impact, i.e. activities for which technical solutions for the transition are not available and which, therefore, can only be decommissioned, as well as those that do have a significant negative impact but whose future prospects are such that they can either be decommissioned or embark on a transition strategy towards a better performance in terms of sustainability. It should be noted that the production of nuclear energy is also included among the additional activities to be included in the climate taxonomy.

On April 21, a first delegated act was approved (formally adopted on June 4, for examination by the European Parliament and Council), containing the technical criteria on the basis of which an economic activity can be defined as "sustainable". In particular, the delegated act published concerns the first two environmental objectives of the Taxonomy: mitigation and adaptation to climate change. And in June 2021 the EU Taxonomy Compass  (7) was also published. In the text of the delegated act approved by the Commission, the two most discussed sectors were left out: gas and nuclear, so in fact any final decision was postponed (8). In this sense, however, the EC also intends to consider a legislative proposal to support some activities that contribute to the reduction of greenhouse gases, mainly in the energy sector.

Furthermore, screening criteria have been accepted for the environmental objectives to be adopted by the first half of 2022, as well as the screening criteria for further activities that contribute to the climate objectives. Indeed, as part of the taxonomy regulation, the TEG (the group of technical experts on sustainable finance set up by the European Commission in July 2018) was asked to develop recommendations for technical screening criteria for economic activities that can make a substantial contribution. mitigation or adaptation to climate change. The TEG on 9 March 2020 published its final report on the EU taxonomy, which includes a number of recommendations related to the overall design of the EU taxonomy, as well as an extensive implementation guide on how companies and financial institutions can pose themselves, in terms of use and disclosure, with respect to taxonomy.

Further initiatives in this area are aimed at encouraging the transition by stimulating financial innovation with the introduction of new tools such as the new "labels" valid for all EU countries. The idea is to intervene in the matter, by 2022, for the Transition Bonds and Sustainability-Linked Bonds, proceeding with related labeling called the transition label or the sustainability-linked bond label (9). At the moment, in fact, there are as many as 8 labels, in particular present in France, Belgium and Luxembourg, which provide guarantees on the asset allocation of portfolios and are used as points of reference by responsible investment professionals (10).

Furthermore, minimum sustainability criteria are envisaged for financial products that promote environmental or social characteristics (pursuant to article 8 of the Sustainable finance disclosure regulation, or SFDR (11) and, finally, targeted amendments to the Prospectus Regulation in relation to ESG (12) instruments, to increase the transparency and comparability of information on sustainability profiles and reduce the risks of the so-called green washing (to be introduced already in 2022).


2.2 Improve inclusiveness

The term inclusion includes strategies aimed at including all economic actors in the de-carbonization process and, in this regard, SMEs form a primary reality of the European entrepreneurial fabric and, as such, are to be considered as an important driving force of transition. It is therefore relevant (this is the Commission's assertion) to make available to the same additional forms of raising capital to support "green recovery" (13). In this context, retail investors must be offered portfolio diversification strategies to encourage them to invest in productive and sustainable growth activities.

The Commission, therefore, in addition to the Commission's action plan for the Capital Markets Union (in short, the CMU Plan), has announced that it intends to adopt some measures to encourage the development of green loans and mortgages, also by requesting to the EBA (14) an opinion on the definition and useful tools for this purpose and by launching an information campaign on their characteristics and benefits.

Moreover, it is planned to strengthen ESG skills and the qualification of consultants, as well as to improve the degree of financial literacy of citizens (with the OECD/INFE (15) also by increasing access to consultancy services on sustainability for businesses, especially for SMEs in line with what has recently been done with the “EU Taxonomy Compass”.

In addition, the EC intends to encourage the development of innovative digital technologies to support sustainable transition by including, among others, sustainability information in the European Single Access Point (ESAP (16) and in the Open Finance Framework. It is also the intention of the EC to encourage the development of technologies (such as DLT) with low or zero emissions and efficient in terms of energy consumption (17).

But the actions envisaged actions to promote inclusion provide for an articulated series of interventions that also concern: better integration of climatic and environmental risks through insurance coverage (18); the publication of a report on a social taxonomy by the end of 2021 (19) and the revision, by December 2022, of the RTS of the SFDR regulation with regard to environmental and social indicators; the improvement of methodologies for monitoring expenditure on climate and biodiversity; support for member states wishing to redirect their national budget to green priorities and the organization of an inaugural annual summit on sustainable investment ahead of COP 26 (20).


2.3 Increase resilience and contribution to sustainability

To improve economic and financial resilience and maximize the contribution to sustainability, the Commission proposes a number of broad-based initiatives.

Firstly, in order to improve economic and financial resilience, it is envisaged, in collaboration with EFRAG, ESMA and the IASB (21), to better integrate sustainability risks in reporting, on financial reporting standards so that themselves can best "capture" the risks relevant to sustainability in credit ratings. Moreover, based also on the assessments of ESMA, the Commission considers that it is taking action to ensure that the relevant ESG risks are systematically captured by credit ratings and rating outlooks in a transparent manner and, it sets the first quarter of 2023 as a target date for the achievement of objectives in micro and macro prudential regulation. The Commission intends to propose changes to the CRR and the CRD (22) to ensure the consistent integration of sustainability risks into banks' risk management systems, including stress tests on climate change; it is also considered to propose amendments during the revision process of the Solvency II Directive (2021)  (23) to consistently integrate sustainability risks in the risk management of insurers, including the analysis of climate change scenarios.

Also with a view to improving economic and financial resilience, the Commission also intends to mandate EIOPA to assess the need to change the existing prudential treatment and will strengthen long-term financial stability through closer cooperation with the ECB, ESRB, ESAs and EEA in the field of financial stability risk assessment, by publishing a report on these risks by the end of 2023 and by giving mandate to the ECB and ESAs to conduct periodic stress tests, as well as a mandate to the ESAs for the development of related methodologies; it will also assess how the risks identified in the stress tests can be incorporated into micro and macro prudential regulation and supervision and, finally, consider adopting a legislative proposal in the context of the review of the macro-prudential framework of banks.

With regard to the latter aspect, the Commission will initially focus on banking intermediaries while in the medium term it will also cover non-bank financial intermediaries.

For the other aspect connected to the increase in the contribution of the financial system to sustainability, the new strategy includes a series of initiatives to improve the transparency of financial institutions on sustainability objectives and transition plans (through the CSRD and targeted changes to the RTS of the SFDR), as well as to ensure that these commitments are credible and to monitor their progress and the reliability and comparability of ESG ratings, and to further evaluate certain aspects of ESG research, to decide if action is needed (24).

In addition, a further series of measures envisage interventions in order to contribute to the alignment between the interests of investors and those of "financial market participants" and "financial advisors through both a reshaping of the fiduciary duties of the latter, to take into account the positive and negative impacts on the sustainability of investment and advisory decisions (25), as well as the revision of the legislation on stewardship activities (SRDII) by 2023 and the development of further guidelines on the subject of engagement. To improve economic and financial resilience and maximize the contribution to sustainability, the Commission proposes a number of broad-based initiatives.


2.4 Ensure the integrity of the EU financial system and monitor its orderly transition to sustainability

To achieve the objectives set out in the Plan, the strategy developed by the Commission establishes some intermediate steps which consist in a more incisive action to combat green washing in the financial market, in developing a system for monitoring progress in the transition, in strengthening cooperation between all competent public authorities, including supervisory authorities. Regarding the first aspect, measures are foreseen to increase transparency and help final investors to identify credible investments (26).

As for the need to develop a system for monitoring progress in the transition, the Commission, in collaboration with the Platform on Sustainable Finance, intends to activate a monitoring system to measure capital flows towards sustainable investments. In addition, the Commission will assist Member States in assessing the investment gap needed and in measuring the progress made by the financial sector to achieve European climate and environmental objectives (27). Finally, cooperation between all competent public authorities, including supervisory authorities, the ECB, the ESRB, the ESAs and the EEA is considered indispensable to foster the consistent integration of the dual materiality perspective across the financial system as well as the definition of intermediate objectives compared to those of the Green Deal. The Commission intends to establish a research forum on sustainable finance to strengthen the role of science and encourage the sharing of knowledge on sustainable finance between academia and industry.


2.5 Create international sustainable finance initiatives and standards and support EU partner countries

To promote the level playing field (28) in the development of sustainable finance in the international field and to ensure the success of the transition at the global level, the Commission intends to intervene in international fora, in particular with regard to the concept of double materiality (which considers the impact of ESG variables both on financial performance and on business activities in relation to the environment and society (29), and to the objectives and principles for taxonomies, to urge an extension of the work of the IPSF (International Platform on Sustainable Finance) to new topics and to strengthen its governance; and, support low- and middle-income countries in expanding their access to sustainable finance by developing a global strategy and promoting sustainable financial instruments.



3.1 Introduction

The package of measures presented by the European Commission on 6 July 2021 also includes the proposal for a regulation of the European Parliament and of the Council on European Green Bonds (in short, “EUGB”).

The proposal presented aims to overcome some of the criticalities that currently characterize the green bond market, that is, the excessive fragmentation of the market due to the presence of a multiplicity of private standards, the absence of standardization and the difficulty of comparing bond issues. green that refer to different standards, as well as the risk of distorting the investment decisions of investors attentive to sustainability profiles.

Therefore, in line with the provisions of the Action Plan on sustainable finance of March 2018 and the European Green Deal Investment Plan of 14 January 2020, the EC proposal is aimed at the introduction at European level of uniform requirements to which all issuers (private individuals and sovereigns, also based outside the European Union) will be able to voluntarily join for the offer to European investors of their green bonds such as EU Green Bonds. Finally, the proposal establishes a registration and supervision system focused on ESMA of the subjects that carry out external auditing activities on the EUGBs.

With the definition of uniform rules at European level, therefore, the aim of expanding the green bond market and preserving its integrity should be achieved, also by imposing strict compliance with effective sustainability requirements and protecting investors from the risk of greenwashing.

With the definition of uniform rules at European level, therefore, the aim of expanding the green bond market and preserving its integrity (30) should be achieved, also by imposing strict compliance with effective sustainability requirements and protecting investors from the risk of greenwashing (31).


3.2 European Green Bonds

Articles 3 to 7 of the proposed regulation establish the requirements under which an issuer can designate its bond offer as European Green Bonds.

First, the funds raised must be used exclusively to directly finance fixed assets (tangible or intangible) or capital expenditure or operating expenses, which are connected to eco-sustainable economic activities pursuant to the Taxonomy Regulation, or, alternatively, the proceeds of The issue can be used for financial assets whose proceeds are in turn connected to eco-sustainable economic activities pursuant to the Taxonomy Regulation (32). The allocation of proceeds by the issuers must take place on the basis of the technical screening criteria identified in the delegated acts approved by the European Commission in implementation of the Taxonomy Regulation and which are in force at the time of the bond issue. To avoid the uncertainty resulting from changes in the screening criteria during the maturity period of the green bonds, in the event that these delegated acts are modified after the issuance of the green bonds, the issuer will be required to allocate the funds raised using the new criteria of technical screening within five years from the date of application of the changes.

The second pillar of the proposed regulation concerns the regulation of a transparency regime for EU Green Bonds, a regime to which the bond issued is subject both before and after the issue.

In summary, in this respect, the proposed regulation provides for the publication by the issuer of three distinct types of information documents. In fact, even before issuance, the issuer must provide an information sheet on the green bond drawn up in compliance with a model provided for in the annex indicated with number 1 to the proposed regulation (33), accompanied by a positive opinion from an external auditor. outcome of a pre-issuance review (see Article 8 (34).

Each year following the issue (and until the full allocation of the funds raised with the issue), the issuers are required to prepare and publish a report using the model provided in Annex no. 2 to the proposed regulation, which demonstrates that, during the reference period, the employment requirements governed by the regulation were met. Furthermore, issuers must appoint an external auditor to carry out a post-issuance review on the report prepared after the complete allocation of the funds raised, in order to ascertain compliance with the employment requirements set out in articles 4 to 7 of the proposed regulation (cf. Article 9 (35).

Finally, after the complete allocation of the funds raised and at least once during the life of the bonds, the issuers are required to prepare a green bond impact report using the model contained in attachment no. 3 to the proposed regulation, in order to describe the environmental impacts of the use of the funds raised (see Article 10).

In particular, it should be noted that Article 12 of the proposed regulation deals with governing relations with the Prospectus Regulation (EU regulation 2017/1129). Ultimately, when a prospectus must be published pursuant to the Prospectus Regulation, it must clearly establish (where information is requested on the use of the funds raised) that the European Green Bond has been issued in compliance with this proposed regulation; for the purposes of Article 19, first paragraph, letter c), of the Prospectus Regulation, the "regulated information" must also include that contained in the information sheet of the European Green Bond drawn up pursuant to Article 8, first paragraph, letter a) , of this proposal for a regulation.

Finally, Article 13 of the proposed regulation requires issuers to publish this documentation on their website in a special section "EU Green Bonds", accessible free of charge at least until the maturity date of the bond. Furthermore, the article regulates an obligation of notification without undue delay by the issuer of the publication of the aforementioned documentation to the competent national authority, as identified by article 36 (i.e. the authority designated pursuant to article 31 of the Prospectus Regulation (36), as well as to ESMA within a period of thirty days.

The proposed regulation envisages, as regards the supervisory functions on compliance with the disclosure obligations outlined above, that these are carried out by the national authority designated pursuant to Article 31 of the Prospectus Regulation and requires Member States to take appropriate measures to ensure that these authorities have the supervisory and investigatory powers necessary for the performance of their functions. In this regard, Article 17 identifies a list of supervisory and investigative powers that the competent national authorities must have at their disposal (37).

Article 41 of the proposed regulation requires, without prejudice to the power of Member States to impose penalties of a criminal nature, on Member States to provide that the competent national authorities have the power to impose administrative penalties that are effective, proportionate and dissuasive in the case violation by issuers of articles 8 to 13 of the regulation (disclosure obligations) or refusal to cooperate or fulfill in the course of investigations, inspections or requests in any case carried out in the exercise of the supervisory powers attributed to the same authorities (38). It also governs a list of administrative sanctions that must be regulated by the Member States (Article 41), the criteria that must be followed by the competent national authorities in the exercise of the sanctioning power (Article 42), the obligation for NCAs to publish in the its website the decision on the imposition of an administrative penalty immediately after its communication to the recipient (Article 44), as well as a reporting regime to ESMA on an annual basis of aggregate data relating to administrative sanctions imposed by NCAs (Article 45).


3.3 Audit obligation and ESMA powers

To ensure that the information disclosed by the issuer on the issue of European green bonds complies with the requirements governed by the proposed regulation and its annexes and that the allocation of proceeds is effectively consistent (before and after the issue) with the destination identified by the same proposed regulation, it is envisaged that the issuer must submit some of the information documents relating to the European Green Bond to the review of an external subject specifically authorized by ESMA and subject to its supervision.

This charge exists both in the phase preceding the issuance of the green bonds, where it concerns the information sheet prepared by the issuer pursuant to Article 8 of the proposed regulation, constituting a requirement in order to proceed with the issue, and in the subsequent phase, where it is required that the issuer submits the allocation report prepared after the full use of the funds raised with the issue of green bonds pursuant to Article 9 of the proposed regulation for review by an external party (there is a heavier obligation, under certain conditions, on financial undertakings pursuant to paragraph 5 of the article).

The external auditor (39), pursuant to Article 30 of the proposed regulation, has the obligation to publish free of charge on his website, in specific sections, the pre-issuance and post-issuance reviews that have been produced by him and keep them available to the public at least until the bond matures.

To complete the regulations envisaged, ESMA is given the power to prepare regulatory technical standards and implementing technical standards, which will be adopted through delegated acts of the European Commission pursuant to Articles 290 and 291 of the TFEU (40).

Furthermore, ESMA is assigned the functions of supervising external auditors and, therefore, of information, investigative powers (including the acquisition of data relating to telephone traffic), on-site (41) inspection, intervention (for example, the cancellation of the registration of the external auditor or the temporary ban on carrying out the auditing activities provided for by the regulation), as well as the imposition of financial penalties (one-off or periodic) for certain types of violations (see Articles 52 and 53 of the proposed regulation (42).



4.1 Introduction

The European Commission in July this year also adopted the so-called "Delegated act" provided for in Article 8 of the Taxonomy Regulation. It should be remembered that the adoption of the delegated act was preceded by the carrying out of an inception impact assessment (i.e. an assessment on the impact of the provision) in August 2020, from the acquisition of the opinion of the ESAs (whose contents were largely taken up by the Commission in the preparation of the act) and, finally, by the carrying out of a three-week public consultation on the draft delegated act concluded on 2 June 2021 (43).

In addition, the project was also discussed with the Platform on Sustainable Finance and with the Member State Expert Group.

The delegated act constitutes, together with the Disclosure Regulation, the discipline of non-financial reporting and the Taxonomy regulation, a central part of the EU regime on sustainability reporting, on which the Union strategy on sustainable finance is based.; in effect, it requires any company subject to the obligation to publish non-financial information pursuant to Directive 2014/95 /EU (44) to include, in the non-financial statement or in the consolidated NFS, information on how ( and to what extent) the company's activities are associated with economic activities considered environmentally friendly pursuant to Articles 3 and 9 of the Taxonomy Regulation (as well as pursuant to the delegated act relating to the climatic aspects of the taxonomy).

In particular, the standard lists the key performance indicators ("KPIs") for non-financial companies, requiring that they report the share of their turnover from products or services associated with sustainable economic activities pursuant to the taxonomy and the share of expenses in capital account and the share of operating expenses relating to processes or assets associated with economic activities considered environmentally friendly under the taxonomy (45).

The disclosure of the elements envisaged by this delegated act will also contribute to the definition of common standards and labels for sustainable financial products (in fact, both the proposed regulation on European green bonds and the proposal for an Ecolabel for sustainable financial products are based on taxonomy of eco-sustainable activities).


4.2 The delegated act

The delegated act that supplements Article 8 of the taxonomy regulation, which requires financial and non-financial companies to provide investors with information on environmental performance, in order to avoid the creation of a facade ecology. Consequently, the delegated act specifies the content, methodology and presentation of the information that companies, financial or otherwise, must communicate on the share of their commercial, investment or loan activities aligned with the EU taxonomy. Article 1 of the delegated act contains some definitions functional to the rest of the discipline  (46), while the following articles from 2 to 6 specify the contents, methodologies and methods of presenting the KPIs separately for non-financial and financial companies, as well as distinguishing within the latter category on the basis of the type of financial institution. The relevant information is specified by referring to the attachments to the delegated act (47).

In particular, with reference to non-financial companies, the contents, methodologies and methods of presentation of information relating to KPIs are specified and standardized in order to identify which of the economic activities of the company concerned are taxonomy-aligned (i.e., eco-sustainable in the light of the discipline of the Taxonomy Regulation and the related delegated acts that specify the technical screening criteria). Furthermore, non-financial companies are expected to accurately indicate in their KPIs the proportion of their taxonomy-aligned activities in relation to each environmental objective to which they contribute substantially.

With regard to financial companies, after having clarified that the KPIs provided for in Article 8 of the Taxonomy Regulation are not appropriate with reference to this category of company, the delegated act identifies specific indicators and methodologies for each type of financial company, also providing that the disclosure of these KPIs by these parties is also accompanied by qualitative information to explain in a clear and easily accessible way to investors the process followed for their determination.

In summary, it should be noted that for asset managers, the main indicator is identified in the proportion of investments made in taxonomy-aligned economic activities with respect to the total value of all investments managed by them, as resulting from the sum of the individual portfolio management activities and collective savings (48). On the other hand, with reference to credit institutions, the main indicator is the green asset ratio (GAR), ie the proportion of exposures to taxonomy-aligned economic activities with respect to the total assets of these institutions.

This indicator is aimed at identifying the eco-sustainable part according to the taxonomy of the financing activity of the real economy carried out by credit institutions (both in the form of credit and investment). Furthermore, to also take into account commercial services and other activities provided by credit institutions in addition to financing, it is envisaged that these subjects must also publish the proportion of their "fees and commission income" that derives from the provision of associated commercial services to taxonomy-aligned economic activities of their customers (49).

As for investment firms, however, the KPIs concern both the trading activity carried out on their own account and that carried out on behalf of customers. With regard to the first activity, the indicator must reflect the proportion of the total assets composed of assets that are associated with taxonomy-aligned economic activities. With regard to the second activity, the indicator must reflect the proportion of the income of investment firms - in the form of fees, commissions and other emoluments for the activities and services provided to clients - which are associated with taxonomy-aligned economic activities (cf. Annexes VII, VIII and XI to the delegated act).

Finally, for insurance and reinsurance companies, a first indicator concerns the investment policy of these entities of the funds raised through their main activities and must reflect the proportion of investments made in taxonomy-aligned economic activities with respect to the total value of the assets. A second indicator, on the other hand, concerns the proportion of total non-life insurance activities represented by insurance activities related to adaptation to climate change and which are carried out in compliance with the provisions of the Climate delegated Act (see Annexes IX, X and XI to the delegated act).

As regards the methods of presentation of information pursuant to Article 8 of the Taxonomy Regulation, it is noted that the delegated act requires publication in table format, through the use of the various models contained in the annexes to the delegated act for non-financial companies and for each type of financial enterprise.

In addition to the above, it should be noted that the delegated act also provides for common rules that apply to all types of financial companies (see Article 7), with particular regard to the calculation of KPIs in relation to exposures to non-financial companies. financial transactions that do not fall within the scope of the NFRD and which are therefore not subject to the disclosure requirements referred to in Article 8 of the Taxonomy Regulation. In particular, it is envisaged that financial companies must not take into account the exposures or investments relating to these subjects in the calculation of the numerator of the KPIs (50). Furthermore, it is envisaged that financial firms must not take into account exposures to central governments, central banks and supranational issuers in the calculation of the numerator and denominator of KPIs, given the lack of appropriate calculation methodologies (the possibility remains financial firms to publish, on a voluntary basis, information on their exposures in bonds issued by such subjects and in line with the taxonomy (51).

In addition, the EC delegated act also dictates common rules (see Article 8) to all companies subject to the disclosure obligations in question, whether financial or non-financial, concerning the location of the indicators and additional qualitative information (they must be integrated in the non-financial statement), the reference period and the currency to calculate the KPIs (the same used by the obliged entity for financial reports).

Finally, the delegated act also contains a review clause (Article 9) in order to take into account future evolutions of the EU regulatory framework on sustainable finance, with particular regard to those concerning the discipline of sustainability disclosure.

In particular, the possibility of including exposures to sovereign issuers and exposures to entities that are not subject to the obligations envisaged by the NFRD in the calculation of the KPIs for financial companies is envisaged, after carrying out a specific impact analysis activities.

In consideration of the application of the EU Taxonomy Climate Delegated Act starting from the end of 2021, the delegated act provides for a regime of progressive application of its provisions. With the exception of some specific elements (52), in fact, the forecasts for non-financial companies will apply starting from 1 January 2023 (with reference to the performance of 2022), while those for financial companies starting from 1° January 2024 (53) (with reference to the performance of 2023).


Autore: Dott. Enea Franza, Direttore Consob 



1 The plan outlines ten reforms which, moving on the defined objectives, envisage, respectively, the establishment of a unified system at EU level for the classification of sustainable activities; to create standards and brands for sustainable financial products; to promote investments in sustainable projects; to integrate sustainability into financial advice; to develop benchmarks on sustainability; to better integrate sustainability into ratings and market research; to clarify the obligations of institutional investors and asset managers; to integrate sustainability into prudential requirements; to strengthen communication on sustainability and accounting regulation and, finally, to promote sustainable corporate governance and mitigate the short-term vision in capital markets. See: https://eur-lex.europa.eu/legal-content/IT/TXT/PDF/?uri=CELEX:52018DC0097&rid=4

2 For further information, see by the same author "The European action plan on sustainable finance: the point on the state of implementation" in "The law of the economy", year 66, n. 103 (3 2020), pp. 675-705.

Strategy for financing the transition to a sustainable economy. See: https://ec.europa.eu/info/publications/210706-sustainable-finance-strategy_en

4 See also: "The Commission presents a new strategy to make the EU financial system more sustainable and proposes a new European standard for green bonds" Press release Brussels, 6 July 2021

5 The taxonomy, in fact, aims to clarify the classification of economic activities that can be defined, in fact, "sustainable" for the environment. "A practical guide - writes the Commission - for politicians, businesses and investors on how to invest in economic activities that contribute to having an economy that does not impact the environment". Ultimately we try to answer questions such as: is a photovoltaic system environmentally "sustainable"? Is it a farm or a cement factory? And, what parameters must the various economic activities comply with in order to be considered "with low environmental impact"?

6 The Sustainable Finance Platform is a permanent meeting point between the European Commission's expert group on finance and sustainability. On 12 July, the consultation document on viable options for extending the transition to transition activities was published. The consultation closes on 27 August. https://ec.europa.eu/info/publications/210712-sustainable-finance-platform-draft-reports_en

7 The EU Taxonomy Compass, a digital tool to facilitate access to the contents of delegated acts with the technical criteria of the taxonomy of sustainable economic activities. Official EU documents call it an "EU taxonomy compass".

8 As regards nuclear power, the European Commission has recognized the need to adopt what it calls a "delicate compromise". The Joint Research Center, an internal body of the Commission, has prepared a draft report to assess the possible harmful consequences of nuclear power ("do no significant harm"). The report is currently under review by two independent expert groups: the Expert Group on Radiation Protection and Waste Management and the Scientific Committee on Health, Environment and Emerging Risks. Both have three months to provide their evaluations». The choice adopted regarding gas is on the same line. In this way, the Commission confirmed its openness towards the inclusion of natural gas plants among the economic activities useful for the ecological transition within the EU taxonomy. "We have evaluated the inclusion of natural gas from a technical point of view - reads a statement from the Commission - In this context, there is a wide range of evaluations. A complementary delegated act, which will be adopted in 2021, will deal with the subject. Furthermore, the Commission will consider the possibility of specific legislation on gas.'

9 In particular, Sustainability-Linked Bonds ("SLBs") are any type of bond loan with financial and / or structural characteristics that may vary depending on whether or not the issuer achieves predefined sustainability / ESG objectives. In this sense, the issuers explicitly undertake (also in the documentation of the bonds) to achieve certain future sustainability results within a predefined time frame. SLBs are therefore a tool aimed at achieving a future goal and based on the issuer's sustainability performance. These objectives are (i) measured through the definition of Key Performance Indicators (KPI) and (ii) evaluated against predefined Sustainability Performance Targets (SPTs). The proceeds of the SLBs are intended to be used for general purposes, so their specific use is not a determining factor in their classification. Regardless, in selected cases, issuers may choose to combine the GBP / SBP approach with SLBPs. Therefore, it should be noted that SLBs should not be confused with Sustainability Bonds (ie bonds characterized by "Use-of-Proceeds" as defined by the Sustainability Bond Guidelines).

10 The labels present are essentially of two types: the labels of sustainable finance of funds that have the label because they take into account environmental, social and governance criteria in the management of portfolios and, those of funds that can be defined green, i.e. representatives of green finance and are, in most cases, environmental or climate thematic funds.

11 From 10 March 2021, EU regulation 2019/2088 on information on sustainability in the financial services sector (Sustainable finance disclosure regulation, or SFDR) has been applied, which concerns "market participants and financial advisors". The legislation focuses on the services that can most influence sustainable investments, i.e. consultancy and asset management in a broad sense, i.e. inclusive of individual portfolio, collective, insurance and pension management. The regulation introduces transparency obligations relating to the methods of integrating ESG (environmental, social and governance) factors and risks into company processes and product management.

12 ESG stands for Environmental, Social and Governance and refers to three central factors in measuring the sustainability of an investment. ESG analysis focuses on how companies operate in society and how this affects their current and future performance.

13 For further information see: E McGaughey, M Lawrence and Common Wealth, 'The Green Recovery Act 2020', proposed UK law on website, and pdf. See 'The Guardian view on a post-Covid-19 recovery: not much building back greener' (7 July 2020) Guardian, "Mr Johnson has talked of a "new deal" and he could take up the suggestion by the Common Wealth thinktank to legislate for a green recovery act to drive an economic revival with renewable energy at its core."

14 The European Banking Authority is the body of the European Union which since 1 January 2011 has the task of supervising the European banking market. All the banking supervisory authorities of the European Union participate in it. The Authority replaces the Committee of European Banking Supervisors and is based in Paris

15 The OECD International Network on Financial Education - created in 2008, includes over 270 public institutions from 108 countries and aims to exchange experiences and good practices, collect data, carry out analytical work and develop policy tools. measurement are key elements in the development of national financial education strategies.

16 The ESAP is an EU-wide mechanism that offers accessible, comparable and digitally usable information, consisting of a platform that offers a single point of access and a harmonized approach to published information on companies.

17 DLT is a property registration tool. At the moment, for example, when a bank carries out a transaction, or when a transfer of ownership of money or financial assets occurs, this occurs through centralized systems, often managed by central banks. Banks keep track of their transactions in local databases; these are updated once an operation has been performed in the centralized system. A distributed ledger, on the other hand, is a database of operations distributed over a network of numerous computers, rather than kept at a central node. Usually all members of the network can read the information and, depending on the permissions they have, they can also add it. The most common type of DTL is called "blockchain", referring to the fact that transactions are grouped into blocks and these are joined together in chronological order to form a chain. The entire chain is protected by complex mathematical algorithms that are intended to ensure the integrity and security of the data. This chain forms the complete log of all transactions included in the database.

18 EIOPA will have to identify gaps in insurance protection through its natural disaster dashboard and initiate a dialogue on climate resilience with all stakeholders (2022).

19 The Sustainable Finance Platform published on 12 July u.s. a Draft proposal for a social taxonomy for consultation from 12 July to 27 August. https://ec.europa.eu/info/publications/210712-sustainable-finance-platform-draft-reports_en.The platform's advice will converge in the Commission's report on the potential extension of the taxonomic framework to be adopted by the end of 2021, as established in Article 26 of the taxonomy regulation.

20 The 2021 United Nations Climate Change Conference, also known as COP26, is the 26th United Nations Climate Change Conference. It will be held in the city of Glasgow from 31 October to 12 November 2021 under the UK presidency.

21 The European Financial Reporting Advisory is a technical, not a political entity that deals with accounting principles at an international level. Together with the Accounting Regulatory Committee, of a political nature, EFRAG contributes to the approval process of the accounting principles; The European Securities and Markets Authority is a body of the European Union which, since 1 January 2011, has the task of supervising the European financial market. All the banking supervisory authorities of the European Union participate in it. And finally, the International Accounting Standards Committee, now called the International Accounting Standards Board, is the body responsible for issuing international accounting standards.

22 Respectively, Regulation (eu) n. 575/2013 of the European Parliament and of the Council of 26 June 2013 relating to prudential requirements for credit institutions and investment firms and amending Regulation (EU) no. 648/2012 and Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the business of credit institutions and on the prudential supervision of credit institutions and investment firms, amending Directive 2002/87 / CE and repeals Directives 2006/48/EC and 2006/49/EC.

23 Directive 2009/138/EC of 25 November 2009

24 A possible legislative proposal is expected for the first quarter of 2023. ESG ratings show some distortions, weak correlations, lack of transparency in the methodology used and potential conflicts of interest. A regulatory framework for ESG ratings would improve their reliability and accuracy, taking into account the availability of a broader information framework thanks to the Corporate Sustainability Reporting Directive (CSRD) and the ESAP. Such a framework would contribute to a common understanding of companies' ESG performance by investors.

25 In particular, the Commission will ask EIOPA to assess the need to review the fiduciary duties of pension funds to reflect the impacts on sustainability as part of the investment decision-making process. It will also assess whether the other sectoral regulations (UCITS, AIFMD, MIFID II and IDD) need to be amended accordingly.

26 Since the effectiveness of these tools also depends on an adequate level of application of the rules in the EU, the European Commission will assess, with the support of the ESAs, whether the existing supervisory framework is adequate to monitor, investigate and sanction green washing phenomena in a such that investors and consumers are protected against unfounded claims of sustainability, taking appropriate measures if necessary;

27 By the end of 2023, the Commission will present a report on the overall state of the transition of the EU financial markets.

28 "The one on climate and energy is an epochal challenge that must be faced through inclusive dialogue and collaboration, following a pragmatic but not ideological approach that allows the achievement of objectives without penalizing companies and countries that, like Italy, already have 'Much has been done to accelerate the energy and environmental transition. About 90 trillion in global investments will be needed by 2050. Over the next 10 years, over 3.5 trillion will be needed in Europe, of which over 650 billion in Italy. 'concrete. Just as it is that of maintaining a manufacturing system that must ensure employment and development for future generations". Emma Marcegaglia, president of the B20, at the G20 Environment, Climate and Energy Ministerial Conference on 23/7/21 at Palazzo Reale in Naples.

29 The Commission intends to propose integrating the principle of dual materiality into the FSB's mandate.

30 Market integrity has in fact become a general principle which can be resolved, on the one hand, by the activity of the legislator and regulators aimed at preserving (or rather contributing to the construction) of efficient and fully competitive markets; on the other hand, the identification of the most appropriate remedies, both public and private, aimed at protecting the freedom of choice of weak market players, consumers-investors. See, in this regard: a) art. 6, paragraph 02, TUF (entitled ―Regulatory supervision‖) provides that ―For the matters governed by Directive 2006/73 / EC, of ​​the Commission, of 10 August 2006 [on the subject of organization requirements and conditions for the investment firms, the Bank of Italy and Consob may maintain or impose prescription obligations only in exceptional cases in which such obligations are objectively justified and held, taking into account the need to face specific risks for the protection of investors or 'market integrity' (emphasis added); b) art. 21, paragraph 1, lett. a), TUF (entitled ―General criteria‖ and placed within the framework of the regulation of investment activities and services) provides that In providing investment services and activities and accessories, the qualified parties must: a) behave with diligence, fairness and transparency, to better serve the interests of customers and for the integrity of the markets; […]. Ultimately, in the first of the provisions regarding market integrity, it sets out the objective that the supervisory authorities can place at the basis of extraordinary regulatory interventions on the markets; in the second, the integrity of the markets instead marks the purpose to which the conduct of investment firms must comply in the exercise of their business.

31 The Commission's proposal for a regulation is based on the regulation of four fundamental aspects of European Green Bonds: the obligation to assign the funds raised through the bond issue exclusively to eco-sustainable economic activities pursuant to the Taxonomy Regulation or to projects that contribute to the transformation of assets economic in reality eco-sustainable; the provision of detailed disclosure obligations, prior to and subsequent to the bond issue, of the methods for assigning the funds raised, in order to ensure full transparency in the use of capital and the attribution to the competent national authorities of the relative supervisory functions and related enforcement powers; the obligation to submit the information published by the issuer in relation to EUGBs to the control of an external auditor to ascertain that the bond issue complies with the regulations and that the financed projects are aligned with the Taxonomy Regulation (a degree of flexibility, albeit limited, it is envisaged for sovereign issuers); the obligation to register with ESMA and submit to the related control of external auditors who provide services in relation to green bonds, in order to ensure the quality of their services in the interest of market integrity and for the protection of investors .

32 The funds raised can also be used with reference to economic activities that will comply with the eco-sustainability requirements set out in the Taxonomy Regulation over a period of time defined as specified in a taxonomy-alignment plan, which must indicate the actions and expenses that must be incurred in order for an economic activity to comply with the sustainability requirements set by the taxonomy within, at most, five years from the bond issue, unless a longer period of time (in any case not exceeding ten years) is justified by the specific characteristics of the economic activity concerned.

33 The annexes to the proposed regulation are available at the following address: https://ec.europa.eu/finance/docs/law/210704-proposal-green-bonds-standard-annex_en.pdf

34 The fact sheet can also refer to multiple issues of EU green bonds. Article 8 specifies that the pre-issuance review by the external auditor must have as its object the compliance of the information sheet with the allocation requirements set out in Articles 3 to 7 of the proposed regulation and with the attached model no. 1, as well as contain all the elements indicated in attachment no. 4 to the proposed regulation.

35 In addition, the post-issuance review must also contain an assessment of the issuer's compliance with the use of the funds raised as envisaged in the information sheet published before the start of the bond issue, as well as the elements specified in attachment no. 4. Article 9 also governs the timing of the post-issue review, providing that the issuer transmits the report to the external auditor within 30 days of the end of the reference year and that the external auditor has a deadline of 90 days to publication of the report. Finally, it should be noted that paragraph 5 of the article contains a specific discipline for financial companies that employ the funds raised from a portfolio of EUgreen bonds in a portfolio of financial assets as defined in article 5. For these subjects the obligation applies to obtain a post-issuance review by an external auditor with reference to each allocation report prepared annually, paying particular attention to those financial assets that were not included in any previously published allocation report.

36 In this regard, it should be noted that Article 94, paragraph 2, of the TUF, as amended by the legislative decree adapting our system to the Prospectus Regulation (Legislative Decree no. 17/2021), identifies Consob as the competent national authority pursuant to article 31 of this Regulation.

37 By way of example, the power to impose the publication of the information documents described in the text or to include some missing information, or the power to order the suspension of the offer for a maximum period of ten consecutive working days should be noted. there are reasonable grounds for suspecting that Articles 8 to 13 of the regulation in question have been violated. Under a different but connected profile, Article 38 of the proposal governs the cooperation mechanisms between competent national authorities, imposing on them the obligation to exchange information without undue delay and to cooperate in the activities of investigation, supervision and enforcement, while Article 40 governs the precautionary measures that can be taken where the competent authority of the host Member State has clear and demonstrable reasons to believe that irregularities have been committed by a European Green Bond issuer or that it has violated the provisions of this regulation (in a nutshell, notification to the competent authority of the home Member State and to ESMA, adoption of appropriate measures to protect investors by the competent authority of the host Member State and communication without delay to the European Commission and the ESMA where the measures taken by the competent authority of the Member State or of origin are not sufficient to interrupt the violations of the regulation by the issuer; in the event of disagreement between the competent authorities about the measures taken, possibility of bringing the case to the attention of ESMA).

38 Member States may decide not to regulate administrative sanctions where criminal sanctions are already provided for in national law for the violations described in the text at the date of application of the regulation in question. In any case, the competent national authorities are required to notify the European Commission and ESMA before the date of application of this regulation of the penal and/or administrative sanctions governed by national law for the cases of violations described.

39 Before these external auditors can begin to carry out their activities in relation to the issuance of European green bonds, they are required to register with ESMA.

40 For example, ESMA is expected to prepare RTS in order to specify the requirements necessary to proceed with the registration of an external auditor in the appropriate list, as well as ITS to define the forms and procedures that external auditors must follow to provide the information. necessary during registration.

41 Article 49 of the proposed regulation provides that before proceeding with an on-site inspection, ESMA must notify the competent national authority and that it can proceed only in the absence of opposition. In addition, it is envisaged that NCA officials may be called upon to assist ESMA officials in carrying out the inspection and that ESMA may ask the NCA to directly carry out specific inspection activities.

42 Finally, it should be noted that the proposed regulation governs two transitional regimes for external auditors with registered office in the EU and for external auditors from third countries. In particular, Article 62 of the proposed regulation provides for a simplified regime for the performance of auditing activities on European green bonds for external auditors based in the EU for the first 30 months following the date of application of the regulation. Article 63 of the proposed regulation governs a similar transitional regime for external auditors from third countries.

43 During the consultation on the renewal of the sustainable finance strategy, Consob expressed first positions on the issues of the standard green bond raised in the consultation.

44 In this regard, it is noted that the proposal for a directive of the EC on corporate communication on sustainability ("CSRD"), revising the regulations introduced by directive 2014/95 / EU, will extend the scope of the disclosure obligations provided for by article 8 of the Taxonomy Regulation to new categories of companies, as a consequence of the extension of the obligation to publish the information on sustainability for all large companies pursuant to the Accounting Directive and for all listed companies (with the sole exception of micro-enterprises) .

45 Please note that Article 8 of the regulation does not identify the KPIs applicable to financial companies, that is, for large banks, asset managers, investment companies and insurance companies. Furthermore, the aforementioned provision does not regulate, neither for financial nor for non-financial companies, the specific contents, methodologies and methods of presentation of the information that these subjects must publish. The definition of these elements is in fact left to the adoption by the Commission of the delegated act in question, which specifies the disclosure obligations provided for by Article 8 of the Taxonomy Regulation, translating the technical screening criteria defined by the delegated act relating to the aspects climatic conditions of the taxonomy in quantitative indicators of economic performance (for example, making it possible to identify the percentage of a company's turnover that derives from eco-sustainable economic activities pursuant to the aforementioned technical screening criteria).

46 The notion of "Taxonomy-aligned economic activity" is significant, defined as "an economic activity that complies with the requirements laid down in Article 3 of Regulation (EU) 2020/852". As is known, article 3 of the Taxonomy Regulation specifies the eco-sustainability criteria of an economic activity, requiring that it substantially contribute to the achievement of at least one of the environmental objectives set out in article 9, do not cause significant damage to any of the other environmental objectives, complies with the minimum safeguards provided for by article 18 and complies with the technical screening criteria defined by the Commission with the delegated acts (in particular, for the first two environmental objectives with the so-called Climate Delegated Act).

47 The annexes to the Commission delegated act can be consulted at the following address: https://ec.europa.eu/info/publications/210706-sustainable-finance-strategy_it

48 The proportion of taxonomy-aligned investments of asset managers must be calculated based on the proportion of taxonomy-aligned economic activities of the investment companies based on the KPIs published by them.

49 The delegated act prescribes two additional KPIs for credit institutions. In order to take into consideration the possible performance by these subjects of the management activities of underlying assets and the provision of financial guarantees, which could lead to off-balance sheet exposures, it is envisaged that credit institutions disclose the proportion of economic activities taxonomy-aligned associated with the underlying assets they manage or with the obligations against which they have provided financial guarantees. Secondly, banks are expected to disclose, separately from the rest, the share of their trading book associated with eco-sustainable economic activities. This obligation is more granular where the bank carries out a significant trading activity.

50 This remains without prejudice to the possibility for this category of non-financial companies to publish their KPIs on a voluntary basis, both with a view to attracting greater financing opportunities and to pursue a corporate strategy based on environmental sustainability.

51 Article 7 of the delegated act also provides that financial institutions exclude derivatives from the calculation of the numerator of KPIs. Furthermore, paragraph 6 of the article requires financial institutions to indicate separately in the numerator, if possible, and in the denominator of the KPIs, the exposures and investments in relation to the type of entity financed. For example, it is required that exposures and investments vis-à-vis financial companies, those vis-à-vis non-financial companies, those vis-à-vis non-financial companies not subject to the obligations of the NFRD and headquartered in the Union, are clearly indicated. towards non-financial companies not subject to the obligations of the NFRD and based in a third country.

52 For example, with regard to 2022, non-financial companies will only have to publish the proportion of taxonomy-eligible and non-eligible taxonomy economic activities (as defined in Article 1 of the deed) with respect to their turnover, capital expenditure and operating expenses, as well as the qualitative information indicated in Section 1.2. of attachment no. 1 to the delegated act.

53 Moreover, the provisions on the KPIs of credit institutions relating to the trading book and fees and commissions for commercial services will be applied starting from 1 January 2026.



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