The Taxonomy Regulation requires, in its Article 8, undertakings to include in their non-financial statements information on how, and to what extent, their activities are associated with economic activities that qualify as environmentally sustainable under Articles 3 and 9 of the Regulation.
This information is subject to mandatory auditing under CSRD.
The European Securities and Markets Authority, ESMA, has collected information for Fiscal Year 2022 published by European non-financial undertakings listed in regulated markets, to evaluate the quality of the disclosures with which issuers have responded to the new requirements.
- Almost all issuers, among those being active in four main sectors covered by the Taxonomy Climate Delegated Act, disclosed the required Taxonomy alignment KPIs (96% of the sample).
- Full reporting using the complete templates is mandatory, but for 30% of the sample they were either modified or not fully completed, which may impact comparability and make access to the data more difficult for users.
- For more than 40% of the assessed issuers, at least some of the mandatory qualitative information regarding the assessment of the nature of their activities, the technical screening criteria, the Do No Significant Harm – DNSH criteria, and the minimum safeguards, was missing or insufficient.
- Only 40% of the sample provided comments on their eligibility or alignment rates.
- In addition to the points mentioned above, areas of incorrect application were spotted in relation to the transparency on the avoidance of double counting, the screening of activities against one climate objective only or the reconciliation with financial reporting.
Based on these findings, ESMA reminds issuers of the importance of providing all quantitative as well as detailed qualitative information as required by the Disclosures Delegated Act.
ESMA strongly encourages issuers to use the guidance and tools that the European Commission has published, including guidance on the interpretation and application of certain criteria and disclosures, and online tools to assist undertakings in their Taxonomy reporting.
Access the EU Taxonomy Navigator here >>
ESMA also notes that the European Commission’s June 2023 Communication stresses the role of the Taxonomy as a “common language” which plays a key role in the EU’s Sustainable Finance framework, and which can be further used by undertakings to plan investments and set targets for their transition.
Source: ESMA