Sustainable Finance Insight Series - 18 | RTS on nuclear and gas investment disclosures under SFDR

On 30 September 2022, the European Supervisory Authorities (“ESAs”) delivered to the European Commission their final report setting out draft regulatory technical standards (“RTS”) on the disclosure of financial products’ exposure for investments in fossil gas and nuclear energy activities under the Regulation (EU) 2019/2088 of 27 November 2019 on sustainability-related disclosures in the financial services sector (“SFDR”).

In the RTS, the ESAs propose to add specific disclosures to provide transparency about investments in taxonomy-aligned gas and nuclear economic activities. These disclosures are deriving from the fact that economic activities linked to gas and nuclear energies are introduced by Commission Delegated Regulation (EU) 2022/1214 of 9 March 2022 (we refer to our Sustainable Finance Insight Series - 17 on that matter) and hence recognised as such by the taxonomy regulation as contributing substantially to climate change mitigation (“Nuclear and Gas Delegated Regulation”).

Specifically, the RTS:

• add a yes/no question in the financial product pre-contractual disclosure templates of the SFDR Delegated Regulation^[1] to identify whether the financial product intends to invest in such activities. If the answer is yes, a graphical representation of the proportion of investments in such activities would be required. A footnote was added to this yes/no question to provide an indication of certain conditions under which such activities are aligned with the EU Taxonomy (e.g. contributing to limit climate change and do not significantly harm any environmental objectives); and
• implement similar changes in the periodic disclosure templates to show the proportion of investments in gas and nuclear taxonomy-aligned activities.

The ESAs consider the existing disclosure templates provided by the SFDR Delegated Regulation sufficient for fossil gas or nuclear energy investments by financial products that are not covered by the EU Taxonomy, i.e. investments in gas and nuclear economic activities that are not aligned with the EU Taxonomy (and do not fall under the supplementary disclosures provided by the RTS).

Next steps

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 Nuclear and Gas Delegated Regulation, the ESAs have left it to the European Commission to include an expected application date when the draft RTS is endorsed.

Once the European Commission has approved the draft RTS, the pre-contractual disclosures and the periodic disclosures of all so-called article 8 and article 9 SFDR financial products should be adjusted in order to be in line with the SFDR Delegated Regulation as amended by the RTS.