EUU, Alm.del - 2020-21 - Bilag 595: Orienteringsnotat og høringssvar vedr. virksomheders rapportering under taksonomiforordningen

Europaudvalget 2020-21
EUU Alm.del Bilag 595
Offentligt

NOTE

7. juni 2021

Response to the European Commission’s public consultation regard-

ing the Delegated Act on Article 8 of the Taxonomy Regulation

The Danish Government welcomes the work of the Commission to clarify

the content and presentation of the information to be disclosed by financial

and non-financial undertakings in order to comply with the requirements

in Article 8 of the Taxonomy Regulation (EU 2020/852).

The Danish Government supports the Action Plan on Sustainable Finance

and is committed to work with the Commission and stakeholders to ensure

a market-based transition to a sustainable economy through improved

transparency. We strongly support the Taxonomy Regulation adopted by

the Council and European Parliament establishing a common classification

system for sustainable economic activities. The Taxonomy Regulation can

contribute to facilitate the necessary sustainable investments needed to de-

liver on the EU's commitments towards climate neutrality by 2050.

In that perspective, the Danish Government welcomes the Commission’s

proposal for a delegated act on Article 8 of the Taxonomy Regulation, as

it will provide important data that several other regulations depend on.

Thus, the delegated act will aim at creating a flow of sustainability infor-

mation from the real economy to the financial sector, thereby increasing

transparency and help preventing greenwashing.

The Taxonomy Regulation entails that the companies concerned will dis-

close the proportion of their turnover, capital expenditure (CapEx) and op-

erating expenditure (OpEx) associated with economic activities that qual-

ify as environmentally sustainable. The Danish Government recognizes the

comprehensive advice provided by the European Supervisory Authorities

(ESA's) on how to specify the Article 8 reporting requirements. We believe

this advice constitutes a good basis for the delegated act.

The delegated act should in particular establish a clear and comparable

methodology for the three KPI’s of Article 8 (turnover/CapEx/OpEx) to be

disclosed. This should minimize the need to provide further description of

the accounting policy and reduce complexity for both reporting undertak-

ings and for users of the information. We do however recognize the need

to allow some flexibility to account for diverse business models.

EUU, Alm.del - 2020-21 - Bilag 595: Orienteringsnotat og høringssvar vedr. virksomheders rapportering under taksonomiforordningen

The delegated act should ensure that the reported information to a high

degree fulfills the needs of the users of the information, while not impos-

ing disproportionate costs for the reporting undertakings. Therefore, with

a view to ease the considerable challenge for companies to provide very

comprehensive information on sustainability for the first time within a

tight deadline, we support a phased entry into force of the delegated act

that allows companies to get used to the new requirements. In this regard

we find it important that the delegated is clear on the requirements for the

first year, as we find it unclear at this point. We suggest that a separate

annex is made that clearly explains which information should be included

in the first year. This should be accompanied by a specific template for

the first year in tabular form.

As the reporting requirements will be very detailed, it is of paramount im-

portance to help companies to apply the rules by ensuring easy access to

guidance regarding the interpretation of the complicated provisions of the

delegated act. This would help ensure the full potential of the regulation

and correct reporting. We therefore encourage the Commission to establish

a Q/A on the Commission website as known from other regulations and

would welcome illustrative examples to help companies understand how

to practically apply the rules. Further guidance especially regarding the in-

formation to be reported for the first year would help companies in the

transition.

Considering the very detailed reporting required, we believe there is a need

to carefully consider whether it is possible to include a threshold for when

reporting on individual economic activities is required. We recommend

that the Commission is looking towards the thresholds for reportable seg-

ments in IFRS 8 Operating Segments for inspiration. This will contribute

to alignment with the accounting regulation and protect companies from

being obliged to publish information they consider business sensitive.

Companies should still be able to publish information that is even more

granular voluntarily, and could be encouraged to do so. As the reporting

after the Taxonomy Regulation Article 8 is part of the non-financial report-

ing after NFRD, it should in the delegated act be clearly stated which kind

of materiality should be applied. It is unclear whether the double material-

ity perspective as applicable for NFRD also applies to the information re-

garding the Taxonomy.

According to Article 9.3, the undertakings shall provide the key perfor-

mance indicators covering the previous five reporting periods. We believe

including a transitional provision is needed to clarify that undertakings

should not report for previous years, e.g. before the Regulation was

adopted. This would be a very burdensome exercise and in some cases im-

possible and would be in contradiction with fundamental legal principles.

EUU, Alm.del - 2020-21 - Bilag 595: Orienteringsnotat og høringssvar vedr. virksomheders rapportering under taksonomiforordningen

The Danish Government supports the inclusion of a review clause to assess

the functioning of the delegated act and to consider future policy develop-

ments. In particular, the Danish Government stress the importance of en-

suring alignment and coherence between the Reporting Directive

(2013/34/EU), the Non-Financial Reporting Directive (NFRD) and the

Taxonomy Regulation. The Commission has published a proposal to re-

place NFRD with a Corporate Sustainability Reporting Directive (CSRD).

The CSRD proposal extends the current scope from approximately 11.600

companies to approximately 49.000 companies, including listed SMEs.

The companies that will become subject to the CSRD will also become

subject to Article 8 of the Taxonomy Regulation, since this Article refers

to companies that are obliged to report after the NFRD/future CSRD. If the

CSRD is adopted with a much wider scope than the existing NFRD, as the

Commission has proposed, the Commission should assess the impacts this

will have for the reporting requirements under Article 8 in the Taxonomy

Regulation, as it would be expected to have a considerable impact, and

clarify whether new simplified and more proportionate requirements

should be introduced. Further, the cumulative requirements from sustain-

ability related EU-regulation should be assessed for the full policy areas,

in order to ensure coherence and proportionality

As regards the wording of the proposed delegated act, the Danish Govern-

ment, having consulted with Danish business organizations, points out that

some of the requirements should be further clarified, e.g. the definitions of

CapEx and OpEx, the requirements for the CapEx plan and how companies

not using the calendar year as their financial year should report.

We are at your disposal for further discussion and elaboration on these

points.

As recently acknowledged in COM (2021) 219: Better regulation: Joining forces to

make better laws