European Commission Releases New Sustainable Finance Package


The European Commission has put forward a new package of measures to build on and strengthen the foundations of the EU sustainable finance framework.

The aim of the package is to ensure that the EU sustainable finance framework continues to support companies and the financial sector while encouraging the private funding of transition projects and technologies. Specifically, the Commission is adding additional activities to the EU Taxonomy and proposing new rules for Environmental, Social and Governance (ESG) rating providers, which are designed to increase transparency on the market for sustainable investments. The package aims to ensure that the sustainable finance framework works for companies that want to invest in their transition to sustainability. It aims also to make the sustainable finance framework easier to use, thereby continuing to contribute effectively to the European Green Deal objectives.

The package comprises:

  • The approved EU Taxonomy Environmental Delegated Act (Environmental Delegated Act)
  • Amendments to the EU Taxonomy Climate Delegated Act (Climate Delegated Act)
  • Amendments to the EU Taxonomy Disclosures Delegated Act (Disclosures Delegated Act)
  • A Commission Notice on the interpretation and implementation of certain legal provisions of the EU Taxonomy Regulation and links to the Sustainable Finance Disclosure Regulation (SFDR)
  • A staff working document on enhancing the usability of the EU Taxonomy and the overall sustainable finance framework,
  • Proposed regulation on ESG rating providers
  • A Commission Recommendation on facilitating finance for the transition to a sustainable economy.

Taxonomy Delegated Acts

The Taxonomy Delegated Acts will be formally adopted and sent to the European Parliament and the Council for their scrutiny for up to four months. If, after this period, neither the European Parliament nor Council object, the Taxonomy Delegated Acts will be published in the Official Journal of the EU and apply from 1 January 2024. Companies disclosing on Taxonomy-alignment as part of their non-financial reporting will profit from a phase-in of the rules like those applied to the first two EU Taxonomy objectives (first Taxonomy eligibility, then Taxonomy alignment). Banks, insurers, asset managers and other financial companies have a longer phase-in. There are no transition rules for financial market participants disclosing under SFDR and they will have to make disclosures from 1 January 2024.

Commission Notice

The Commission Notice on the interpretation of certain legal provisions of the EU Taxonomy Regulation and links to the SFDR contains long awaited clarifications on Minimum Safeguards (Article 18, EU Taxonomy Regulation) and “Safe harbour” for Taxonomy-aligned investments under SFDR.

Staff Working Document

The Staff Working Document on enhancing the usability of the EU Taxonomy and the overall EU sustainable finance framework provides an overview of the main pillars of the sustainable finance framework and reflects on recently adopted measures to enhance the useability and effectiveness of the framework.

Rules for ESG Ratings Providers

The Commission has proposed new rules for ESG rating providers designed to improve the integrity, reliability and transparency of their activities. Interestingly the proposal prohibits ESG rating providers from carrying out certain activities such as consulting or benchmark administration, which will lead to some providers needing to make structural changes within their organisations. If these new rules are approved ESG rating providers, offering their ratings in the EU, will need prior authorisation from the European Securities and Markets Authority (ESMA).

While publicly available ESG ratings fall within the scope of the new rules, support to companies and asset managers in developing and applying their own ESG scores are likely not covered.

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