🌍 EU Taxonomy Regulatory Framework and Implementation 🌍
The EU Taxonomy is a fundamental pillar in the European Union's sustainable finance strategy, outlined with the goal of steering investments towards more eco-sustainable economic activities.
The publication of two new delegated acts in the Official Journal of the EU on November 23, 2023, marks a significant acceleration in the adoption of this regulatory framework. Specifically, the Delegated Regulation EU 2021/2139 (Climate Act) and the Delegated Regulation EU 2022/1214 (Supplementary Delegated Act), together with Regulations 2023/2485 and 2023/2486, effective from January 1, 2024, extend the technical screening criteria to the last 4 environmental objectives, in addition to the climate objectives already covered.
The impact of these regulations on corporate disclosure is substantial, requiring all
economic activities identified by Nace codes and falling within the scope of the Directive 2013/34/EU (Accounting Directive) and the Corporate Sustainability Reporting Directive (CSRD), to disclose detailed information about their sustainability. The recent Delegated Directive EU 2023/2775 has further raised the financial thresholds for sustainability disclosures, thus expanding the number of companies involved.
💼 Sustainability Reporting and Regulatory Framework 💼
Mandatory reporting must adhere to the frameworks established by Delegated Regulation EU 2021/2378, focusing on the communication of eco-sustainable economic activities.
This information must be provided in XBRL format, according to labeling rules that are being defined, to ensure maximum transparency and accessibility.
The EFRAG has initiated a public consultation for the XBRL taxonomy draft, which will continue until April 8, 2024, a sign of ongoing commitment towards the updating and adaptation of reporting standards.
📊 Environmental Objectives and Integration in Sustainability Reporting 📊
The EU Taxonomy, besides being a key element for the disclosure of sustainable information, requires companies subject to the CSRD to report on the eligibility and alignment with the taxonomic criteria, promoting integration with the financial statement through specific financial indicators. With the adoption of the new regulations, the framework relating to environmental objectives is now complete, providing essential support to companies through the EU Taxonomy Navigator.
The taxonomy will gradually extend to other social and governance areas, enriching the regulatory landscape for sustainability disclosures. In conclusion, the evolution of the EU Taxonomy and its implementation through specific regulations represent crucial steps towards achieving a sustainable economy at the European level.
The expansion of technical screening criteria and the raising of disclosure thresholds mark significant progress in the path of transparency and corporate responsibility, stimulating greater alignment of economic activities with environmental sustainability objectives.
This strengthened regulatory context, supported by tools like the EU Taxonomy Navigator and integration with ESRS standards, promises to elevate the level of sustainability reporting, guiding companies towards more eco-compatible and responsible practices.
What is the EU Taxonomy and its purpose in sustainable finance?
The EU Taxonomy is a regulatory framework designed to guide investments towards environmentally sustainable activities.
It categorizes economic activities based on their ability to meet specific environmental objectives, aiming to enhance transparency, accountability, and sustainability in financial and corporate reporting.
How do the new EU Taxonomy regulations affect corporate sustainability reporting?
The new regulations under the EU Taxonomy, including the Delegated Regulation EU 2021/2139 (Climate Act) and Delegated Regulation EU 2022/1214, along with the Corporate Sustainability Reporting Directive (CSRD), significantly impact corporate sustainability reporting.
They require entities to disclose detailed sustainability information, aiming to improve transparency and promote the alignment of corporate activities with environmental sustainability goals.
How does the EU Taxonomy contribute to achieving a sustainable economy?
The EU Taxonomy contributes to achieving a sustainable economy by setting clear criteria for what constitutes an environmentally sustainable economic activity.
It encourages companies and investors to move towards greener practices and investments, supporting the broader goal of transitioning to a sustainable economic model that aligns with the European Union's environmental objectives and sustainability targets.