Sustainable Finance
by Nicholas Pfaff, Valérie Guillaumin, Simone Utermarck and Ozgur Altun
The EU’s “sustainability disclosure regime” New and amended EU legislation is introducing significant sustainability and ESG-related disclosure requirements that will impact all participants in the European capital markets. This is arguably leading to what we are referring to as an “EU sustainability disclosure regime” in the ICMA memorandum released on 30 April 2020 (alongside a related podcast). With this publication we aim to provide the market with an initial and practical overview of these developments including in annex a summary of disclosure requirements for issuers (ie large listed companies under the scope of NFRD), asset managers and pension providers, benchmark administrators and credit rating agencies. The Commission indeed launched in the wake of its Action Plan, Financing Sustainable Growth, in March 2018 legislative initiatives leading among other things to significant new disclosure requirements that form the basis of this regime (illustrated in the diagram to the right). They include (i) Disclosure Regulation, (ii) Low Carbon Benchmark Regulation (amending Benchmarks Regulation or BMR) and (iii) the Taxonomy Regulation. The Low Carbon Benchmark Regulation and Disclosure Regulation were both published in the Official Journal of the EU on 9 December 2019 and will apply from 30 April 2020 and 10 March 2021 respectively. The Taxonomy Regulation was adopted by the European Parliament on 18 June 2020.
58 | ISSUE 58 | Third Quarter 2020 | icmagroup.org
The EU’s sustainability disclosure regime: regulations and reporting requirements Issuers NFRD Taxonomy
Benchmark Providers Low-Carbon Benchmark Regulation (BMR)
Asset Managers, Pension Providers & Financial Advisers Disclosure Regulation Taxonomy
Credit Rating Agencies Credit Rating Disclosure Guidelines
Asset Owners (End-Investors)
The main aim of the Disclosure Regulation is to provide more transparency to end-investors on whether and how the buy-side and financial advisers take into account ESG aspects. Our memorandum considers the implications of both the Disclosure Regulation and the Low Carbon Benchmark Regulation for investors. Furthermore, it explains what the Taxonomy Regulation, which is closely linked to the Disclosure Regulation, will mean for both investors and issuers.
