We have recently written on various topics relating to sustainable finance, including social loan principles, greenwashing and the EU Taxonomy Regulation and the related screening criteria. Another important development took place when on 21 April 2021 the EC published a communication "Directing Finance Towards the European Green Deal".

The communication discusses various endeavours, including the EU Taxonomy Climate Delegated Act (“ETCDA”), a proposal for a Corporate Sustainability Reporting Directive (“CSRD”), revision of the Non-Financial Reporting Directive (“NFRD”) and amendments to delegated acts to better reflect sustainability preferences in insurance and investment advice and sustainability considerations in product governance and fiduciary duties.


The ETCDA is intended to be adopted at the end of May and will apply from 1 January 2022. It sets out technical screening criteria for disclosures required under the EU Taxonomy Regulation, designed to determine whether an activity makes a substantial contribution to climate change mitigation and adaptation and does no significant harm to environmental objectives. In our view it should provide a useful guide for financiers and borrowers seeking to ensure that their respective financial products meet the necessary hallmarks to be considered sustainable financing.

Gas and nuclear energy will be covered in a further delegated act, along with agriculture and some manufacturing activities.


The CSRD amends the reporting requirements under the NFRD and extends the scope of reporting to all large private companies and all companies listed on EU regulated markets. It also introduces more detailed reporting requirements according to standards, the first draft of which will be adopted later this year. Companies will be required to make the reported information available to the European single access point (which we wrote about here) envisaged in the Capital Markets Union Action Plan (which we wrote about here). The CSRD introduces an assurance obligation with respect to disclosures.

The European Parliament and the Council will now negotiate a final text in parallel with work on the first set of draft sustainability reporting standards. The European Commission estimates that the earliest that companies would apply the standards would be for the financial year 2023.

While inevitably this will lead to certain increased costs for companies to which the CSRD applies it is arguable that codifying the reporting requirements should, in the long term, reduce the expected future costs for those companies of dealing with disperse information demands of investors and stakeholders.

Delegated Acts

Six delegated acts propose various amendments, expected to apply from October 2022: