EU regulation relative to sustainability

EU Sustainable Finance

There are a certain number of EU regulations and directives that are important to understand as they require some reporting both for companies, issuers, investors and asset managers.

Companies and Issuers

The EU taxonomy is a classification system, establishing a list of environmentally sustainable economic activities. The EU taxonomy is an important enabler to scale up sustainable investment and to implement the European Green Deal. Notably, by providing appropriate definitions to companies, investors and policymakers on which economic activities can be considered environmentally sustainable, it is expected to create security for investors, protect private investors from greenwashing, help companies to plan the transition, mitigate market fragmentation and eventually help shift investments where they are most needed.

The Commission has made an IT tool that facilitate the use by allowing users to navigate easily through the taxonomy. The tool can be found here.

More information on the EU Taxonomy can be found here

The Eu has started the work on a Social Taxonomy.

The document released after the first work can be found here.

“Environmental and social aspects have been part of the EU’s sustainable finance strategy since the very beginning. It is widely recognised that there is a need for social investments to both: (i) achieve the sustainable development goals (SDGs) of the UN’s 2030 agenda; and (ii) create the social internal market set out in the Treaty on European Union (Article 3). It is also widely recognised that businesses must show respect for human rights as envisaged in the UN guiding principles on business and human rights (UNGPs).”

Directive 2014/95/EU – also called the non-financial reporting directive (NFRD) – lays down the rules on disclosure of non-financial and diversity information by large companies. This directive amends the accounting directive 2013/34/EU. Companies are required to include non-financial statements in their annual reports from 2018 onwards.

The NFDR is currently under review and will become CSRD (see own point)

On 21 April 2021, the Commission adopted a proposal for a Corporate Sustainability Reporting Directive (CSRD), which would amend the existing reporting requirements of the NFRD.

Investors and Asset Managers

“This Regulation aims to reduce information asymmetries in principal‐agent relationships with regard to the integration of sustainability risks, the consideration of adverse sustainability impacts, the promotion of environmental or social characteristics, and sustainable investment, by requiring financial market participants and financial advisers to make pre‐contractual and ongoing disclosures to end investors when they act as agents of those end investors (principals).”

The level 1 regulation came into force on 10 March 2021.

Regulatory Technical Standards (RTS) has been worked on since and is specifying details for some of the articles.

Link to the EU document here!

The level 2 – The first draft RTS proposal was submitted to the European Commission early February 2021 and other draft updates including on integrating EU Taxonomy requirements have been publish since then.  It is expected to be in force on 1 January 2023 after postponements. The ESAs are already now suggesting that their templates (even as drafts) should be implemented in documentation for financial products.


The first draft from 04 February 2022 can be found here.

“Final Report on draft Regulatory Technical Standards with regard to the content, methodologies and presentation of disclosures pursuant to Article 2a(3), Article 4(6) and (7), Article 8(3), Article 9(5), Article 10(2) and Article 11(4) of Regulation (EU) 2019/2088”


The second draft from 15 March 2022 including the EU Taxonomy requirements can be found here.

“Taxonomy-related sustainability disclosures
Draft regulatory technical standards with regard to the content and presentation of sustainability disclosures pursuant to Article 8(4), 9(6) and 11(5) of Regulation (EU) 2019/2088″


The third draft from 22 October 2022 can be found here.

“Final Report on draft Regulatory Technical Standards with regard to the content and presentation of disclosures pursuant to Article 8(4), 9(6) and 11(5) of Regulation (EU) 2019/2088”