Final Report - Europa

1 Final Report Advice on Article 8 of the Taxonomy Regulation 26 February 2021 | ESMA30-379-471. ESMA REGULAR USE. Table of Contents 1 Executive Summary .. 6. 2 Introduction .. 8. Background .. 8. Article 8 of the Taxonomy Regulation .. 9. Call for advice ..10. General remarks ..10. 3 Summary of feedback and amendments to the advice ..11. Advice relating to non- financial General comments ..11. Content of KPIs ..17. Definitions of the three KPIs ..17. Definition of proportion of turnover ..18. Definition of proportion of CapEx ..23. Definition of proportion of OpEx ..30. Feedback on the definitions of all three KPIs.

2 36. Accompanying Methodology to Report the KPIs ..48. Presentation of Advice on extent of asset managers investments' Taxonomy-alignment ..81. Content of KPI ..81. Methodology for preparing and reporting the KPI ..94. Presentation of KPI ..105. 4 Annexes ..111. Annex I: Advice to the Commission ..111. Annex II: Call for advice ..126. Annex III - Cost-benefit analysis ..133. 1. Executive Summary ..133. 2. Introduction ..134. 3. Analysis of proposed measures ..135. Annex IV SMSG opinion ..147. 1. ESMA REGULAR USE. Annex V: Standard tables for the disclosure required under Article 8 of the Taxonomy Regulation (non- financial undertakings).

3 162. Annex VI: Standard table for the disclosure required under Article 8 of the Taxonomy Regulation (asset managers) ..168. Annex VII: Methodology to estimate Taxonomy-alignment of non- financial undertakings by other financial market participants using Taxonomy-alignment coefficients 169. 2. ESMA REGULAR USE. Acronyms and definitions Accounting Directive Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC.

4 AIF Alternative investment fund AIFM Alternative investment fund manager APM Alternative performance measure AuM Assets under management CapEx Capital expenditure CapEx KPI Proportion of CapEx related to assets / processes associated with economic activities that qualify as environmentally sustainable under Articles 3 and 9 of the Taxonomy Regulation CFDs Contracts for Differences Commission Delegated Commission Delegated Regulation (EU) 2019/985 of 17. Regulation (EU) 2019/815 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format Consultation Paper Consultation Paper on draft advice to European Commission under Article 8 of the Taxonomy Regulation Commission European Commission DNSH Do no significant harm EBA European Banking Authority EIOPA European Insurance and Occupational Pensions Authority EFRAG European financial Reporting Advisory Group ESAs European Supervisory Authorities (EBA, EIOPA and ESMA).

5 ESMA European Securities and Markets Authority EU GBS EU Green Bond Standard 3. ESMA REGULAR USE. GAAP Generally Accepted Accounting Principles IAS International Accounting Standard IASB International Accounting Standards Board IFRS International financial Reporting Standard JRC Joint Research Centre KPI Key performance indicator NACE Nomenclature des Activit s conomiques dans la Communaut Europ enne - Statistical Classification of Economic Activities in the European Community Non- financial Reporting Directive 2014/95/EU of the European Parliament and of the Directive (NFRD) Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non- financial and diversity information by certain large undertakings and groups OpEx Operating expenditure OpEx KPI Proportion of OpEx related to assets / processes associated with economic activities that qualify as environmentally sustainable under Articles 3 and 9 of the Taxonomy Regulation PFS Primary financial Statements Platform Platform on Sustainable Finance RTO Reception and transmission of orders Regulation (EC) No Regulation (EC)

6 No 1893/2006 of the European Parliament 1893/2006 and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as certain EC Regulations on specific statistical domains (Text with EEA relevance). SFDR Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector Short-Selling Regulation Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps Transparency Directive Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of 4.

7 ESMA REGULAR USE. transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (as amended by Directive 2013/50/EU of the European Parliament and of the Council of 22 October 2013). Taxonomy Regulation Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088. TEG European Commission Technical Expert Group on Sustainable Finance Turnover KPI Proportion of turnover derived from products / services associated with economic activities that qualify as environmentally sustainable under Articles 3 and 9 of the Taxonomy Regulation UCITS Undertaking for collective investment in transferable securities UCITS Directive Directive 2009/65/EC on the coordination laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS).

8 5. ESMA REGULAR USE. 1 Executive Summary Reasons for publication Under Article 8(1) of the Taxonomy Regulation, undertakings required to publish non- financial information pursuant to Articles 19a and 29a of Directive 2013/34/EU (the Accounting Directive') have to disclose information on how and to what extent their activities are associated with economic activities that qualify as environmentally sustainable under the Taxonomy Regulation. On 15 September 2020, the European Commission ( Commission') addressed to the three European Supervisory Authorities ( ESAs') a call for advice (see Annex II)1.

9 The call requested advice on KPIs and methodology on the disclosure of how and to what extent the activities of undertakings that fall within scope of the Non- financial Reporting Directive qualify as environmentally sustainable under the Taxonomy Regulation. A Consultation Paper2 was published on 5 November 2020 to seek the views of stakeholders on a proposal for the advice to be given to the Commission. This Report summarises the feedback to the consultation and sets out ESMA's Final advice to the Commission. Contents This Report is organised into three sections as well as a number of annexes.

10 Section 2 is an introductory section providing background information. Section 3 is split into two sub-sections, which are dedicated to the questions addressed to ESMA in the Commission's call for advice, namely how to further specify the three KPIs already established for non- financial undertakings in Article 8(2) of the Taxonomy Regulation and KPIs for asset management companies in the scope of the Non- financial Reporting Directive. Each sub-section summarises the feedback provided by stakeholders to ESMA's Consultation Paper. Furthermore, it contains ESMA's responses in relation to the proposed amendments to the advice.