EU Taxonomy

Sebastiaan Hooghiemstra at Loyens & Loeff reviews the opinion tabled by the EU’s supervisory agencies on SFDR as a possible labelling regime, and finds that the question on whether “Article 8” and “Article 9” products should be abolished, is not yet off the table.

A lack of reliable Environmental, Social, and Governance (ESG) data is significantly hindering the implementation of the European Union’s sustainable finance regulations, according to a survey by the CFA Institute.

Luxembourg’s financial supervisors are preparing for tough scrutiny of the annual reports that firms will produce in the coming months. The 2022 reports are required to elaborate in detail on the impact of climate change, on the financial fallout from the Ukraine war and on the effects of inflation and rising interest rates.

LuxFlag, the Luxembourg Finance Labelling Agency, raised awareness to market challenges faced in the impact investing space at a side event held on Monday at the EIB Benelux Pavillion at COP27 which is being held in Sharm el-Sheikh, Egypt. The event featured speakers familiar with the challenges of making investments with real impact and of the best way to move forward with sustainable finance.

The European Union, under its taxonomy, requires SRI funds to declare what part of their portfolio is green by 1 January 2023, but there is still much work to be done to address the pitfalls in the EU’s sustainable finance framework, Triodos Investment Management’s Hadewych Kuiper and Nikkie Pelzer (photo) said in an interview. “Some asset managers prefer to classify their sustainable funds under Article 6” because it requires less reporting, making it cheaper.

Members of the European Parliament on Tuesday rejected a proposal by the European Commission to treat nuclear energy and natural gas as sustainable economic activities. If the vote is confirmed by absolute majority in the July 7 plenary meeting, the Commission’s proposal to update the EU taxonomy for sustainable activities will be sent back to the drawing board.

The EU braces for a legal battle over plans to label nuclear energy and gas as sustainable transition fuels. Luxembourg and Austria are preparing steps to have the proposed delegated act annulled.

Just a few weeks after the UN climate conference COP26 in Glasgow, one of the European Commission’s most important initiatives in recent years is under fire: the “EU Taxonomy”. The reason is a number of EU Member States that want to admit natural gas - and even nuclear energy - to the list of green energy sources. Europe suddenly risks becoming “the laggard of the world”, critics have warned.