Legal bases

The following EU acts to promote private sector investment in sustainable and green development based on the European Commission's Action Plan must be observed:

Regulation (EU) 2019/2089 – Climate benchmarks

This Regulation amends Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds (BMR) and introduces EU climate transition benchmarks, EU Paris-aligned benchmarks (Article 19a BMR) and ESG disclosure requirements for administrators. The use of these labels implies a certain selection, weighting, or exclusion of assets. In the case of the EU climate transition benchmark, the reference asset portfolio must be on a decarbonisation trajectory (Article 2(1)(23c) BMR), which is established according to a minimum standard as set out in Commission Delegated Regulation (EU) 2020/1818. In the case of the EU Paris-aligned benchmark, the carbon emissions of the benchmark portfolio must be aligned with the objectives of the Paris Agreement that meet the minimum standard of Commission Delegated Regulation (EU) 2020/1818, and activities relating to the underlying assets must not harm other ESG objectives.

Regulation (EU) 2019/2088 – Sustainability-related disclosure

This Regulation establishes obligations to integrate sustainability into investment processes and strengthens existing disclosure obligations of financial market participants and financial advisors with regard to company-related and product-related sustainability information. It regulates disclosure obligations on sustainability risks, on the adverse impact of investment decisions on sustainability factors and for certain sustainable products. The disclosure obligations of this Regulation are also supplemented by the Taxonomy Regulation with regard to sustainable products. The detailed requirements for the content and form of the disclosure will be set out in a directly applicable Commission Delegated Regulation (draft of February 2021, supplemented on 22 October 2021). The Commission Delegated Regulation shall enter into force in the EU on 1 January 2023.

Regulation (EU) 2020/852 – Taxonomy

This Regulation is the main pillar of the EU sustainability strategy and the Green Deal. It is an extraterritorial classification system ("green list"), according to which environmentally sustainable economic activities can be identified in which sustainable investments can have the greatest possible impact. The TR also aims to protect investors, avoid greenwashing, and support companies in transitioning. The technical screening criteria (TSC) for the individual economic sectors according to the NACE code (Statistical Classification of Economic Activities in the European Community) will be set out in detail in the Delegated Regulation adopted by the European Commission on 21 April 2021, Delegated Regulation (EU) 2021/2139. This Commission Delegated Regulation is to enter into force on 1 January 2022 together with the TR with a view to the environmental goals of climate protection and climate change adaptation. Complementing the Commission Delegated Regulation, the European Commission published Communication C(2021) 188 on 21 April 2021, which provides guidance on how the TR and the Commission Delegated Regulation can be used as a tool for financing change. The TR is a dynamic legal instrument that will be continuously reviewed and further developed with the support of the permanent platform for sustainable investment established by law in accordance with the TR.

A further Delegated Regulation on Article 8 TR, Delegated Regulation (EU) 2021/2178 was adopted by the European Commission, governing the information and methods to be disclosed in the sustainability reports under the planned CSDR, namely how and to what extent the economic activities of companies correspond to environmentally sustainable economic activities as set out in the TR.  This Act entered into force in the EU on 1 January 2022.

Delegated acts

Six delegated acts were adopted by the European Commission on 21 April 2021 to amend various existing delegated acts. The rules cover the inclusion of sustainability risks, sustainability factors, and investor preferences in the business processes underlying the investment decision as well as in the suitability and appropriateness assessment in the context of investment advice. They also contain clarifications with regard to investment and insurance product management so that sustainability is also taken into account in product design. All amendments to the delegated acts support the objectives of the Green Deal by focusing on the long-term promotion of sustainable investments with a positive impact on society and the environment. It is left to product providers, or their consultation with investors and their preferences, to determine the proportion of a product that invests in sustainable economic activities. Three product categories are envisaged: products with partial investment in environmentally sustainable economic activities as set out in the TR, with partially sustainable investments pursuant to Article 2(17) SFDR, or with consideration of adverse external impacts of investments on the environment or society (PAI).

National implementation of Commission Delegated Directives must be examined, while Commission Delegated Regulations have direct effect upon incorporation into the EEA Agreement. The following Acts were adopted.

Delegated Regulation (EU) 2021/1255 (AIFMD)

Delegated Directive (EU) 2021/1270 (UCITSD)

Delegated Directive (EU) 2021/1269 (MIFID)

Delegated Regulation (EU) 2021/1253 (MiFID)

Delegated Regulation (EU) 2021/1256 (VersAG)

Delegated Regulations (EU) 2021/1257 (IDD)

Regulation (EU) 2019/876 amending Regulation (EU) No 575/2013 (CRR)

The new Articles 434a and 449a CRR introduce disclosure of environmental, social, and governance risks (ESG risks). This semi-annual obligation applies to large institutions that have issued securities that are admitted to trading on a regulated market in the EEA, in respect of physical and transition risks. The European Banking Authority (EBA) is also tasked with assessing incorporation of sustainability risks in its supervisory review and evaluation process (SREP) and the possibility of granting exemptions under Article 501c CRR for sustainability assets or activities.

Regulation (EU) 2019/2033 on the prudential requirements of investment firms

Article 53 provides that certain investment firms must disclose information on environmental, social, and governance risks (ESG risks), including physical risks and transition risks.

Non-financial reporting (sustainability report)

The European Commission reviewed Directive 2014/95/EU amending Directive 2013/34/EU on annual financial statements and published a draft for a new amending directive (C(2021)189 final) on 21 April 2021 under the name Corporate Sustainability Reporting Directive (CSRD). This draft is to be formally adopted by the EU legislators by mid-2022, with companies subject to the directive having to provide their first sustainability reports starting in 2024 for the 2023 financial year. In 2022 and 2023, mandatory reporting standards for the subordinated companies, extended to cover all companies listed on stock exchanges, including SMEs, are additionally to be laid down in delegated acts of the European Commission based on proposals of the European Financial Reporting Advisory Group (EFRAG), implementing the "double materiality" approach. This is the principle that information on the impact of the company's economic activities on the overall economy, society, and the environment (external impact) as well as information on the consideration of sustainability within the company for its own value enhancement (internal impact) must be disclosed. The aim is to provide relevant, comparable, and reliable sustainability information.