On 30 September 2022, the three European Supervisory Authorities (ESAs) published a final report containing draft regulatory technical standards (RTS) regarding the disclosure of financial products’ exposure to investments in fossil gas and nuclear energy activities under the Sustainable Finance Disclosure Regulation (SFDR).

The proposed RTS amend the RTS laid down in Delegated Regulation (EU) 2022/1288 as regards the content and presentation of information in relation to disclosures in pre-contractual documents and periodic reports for financial products investing in environmentally sustainable economic activities (the SFDR Delegated Regulation).

The draft changes focus on the disclosure of specific investments in fossil gas and nuclear energy related environmentally sustainable economic activities (taxonomy-aligned investments) as part of the disclosures of the taxonomy-aligned investments of the financial product. In particular the proposed changes include:

  • Amendments to Chapter III of the SFDR Delegated Regulation to include similar language to Article 2 of Commission Delegated Regulation 2022/1214 (the Complementary Climate Delegated Act) according to which ‘Non-financial undertakings and financial undertakings shall disclose the amount and proportion of: (a) the taxonomy-aligned economic activities referred to in Sections 4.26, 4.27, 4.28, 4.29, 4.30 and 4.31 of Annexes I and II to Delegated Regulation (EU) 2021/2139 in the denominator and the numerator of their key performance indicators’.
  • Changes to the pre-contractual and periodic disclosure templates to show the proportion of investments in gas and nuclear taxonomy-aligned activities, based on feedback provided by the ESAs’ stakeholder groups and consumers’ associations.

Furthermore the ESAs have proposed changes to the pre-contractual templates so that they include a yes/no question to identify that a product intends to invest in gas and/or nuclear taxonomy-aligned activities. If the product intends to invest in such activities, the graphical representation will require the identification of the relevant proportions. If the product does not intend to invest in such activities, such breakdowns are not required in the graphical representation and the existing graphical representations from the already published version of SFDR Delegated Regulation should be used instead. A footnote was added to the yes/no question to provide an indication of certain conditions under which such activities are aligned with the EU taxonomy. Similar changes were inserted in the templates for periodic disclosures.

The draft RTS also make:

  • A technical change to Article 55 of the SFDR Delegated Regulation, which makes periodic disclosure of taxonomy-aligned investments for Article 8 SFDR financial products conditional on a “commitment to make investments in economic activities that contribute to an environmental objective within the meaning of Article 2, point (17), of Regulation 2019/2088”.
  • Two clerical changes to the cross-references in the periodic disclosures under Article 55 and 62, where the current reference to Article 15(1) and 15(2)(b) respectively was erroneous and should have referred to Article 15(3).
  • Minor changes to the templates for financial product pre-contractual and periodic disclosures provided in Annexes II to V.

The European Commission will scrutinise the draft RTS and endorse them within three months of their publication. Due to the urgency of the matter and the challenging application timeline of the Complementary Climate Delegated Act, the ESAs have left it to the Commission to include an expected application date when they endorse the draft RTS.