Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the establishment of a framework to facilitate sustainable investment
Date: 2018-05-24
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: EU environmental policy, climate change policy, economic activity, economic instrument for the environment, environmental protection, financial market, green economy, investment, sustainable development

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   EUROPEAN COMMISSION  Brussels, 24.5.2018 COM(2018) 353 final 2018/0178 (COD)  Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the establishment of a framework to facilitate sustainable investment (Text with EEA relevance) {SEC(2018) 257 final} - {SWD(2018) 264 final} - {SWD(2018) 265 final}  
 
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal  

This proposal is part of a broader Commission initiative on sustainable development. It lays 
the  foundation  for  an  EU  framework  which  puts  Environmental,  Social  and  Governance 
(ESG)  considerations  at  the  heart  of  the  financial  system  to  support  the  transformation  of 
Europe's  economy  into  a  greener,  more  resilient  and  circular  system.  To  make  investments 
more  sustainable  ESG  factors  should  be  considered  in  the  investment  decision  making 
process,  when  taking  into  account  factors  such  as  greenhouse  gas  emissions,  resource 
depletion, or working conditions. This proposal, and the legislative acts proposed alongside it, 
aim at integrating ESG considerations into the investment and advisory process in a consistent 
manner  across  sectors.  This  should  ensure  that  financial  market  participants  (UCITS 
management  companies,  AIFMs,  insurance  undertakings,  IORPs,  EuVECA  managers  and 
EuSEF managers), insurance distributors or investment advisors, who receive a mandate from 
their  clients  or  beneficiaries  to  take  investment  decisions  on  their  behalf,  integrate  ESG 
considerations  into  their  internal  processes  and  inform  their  clients  in  this  respect. 
Furthermore,  to  help  investors  compare  the  carbon  footprint  of  investments,  the  proposals 
introduce  new  categories  of  low  carbon  and  positive  carbon  impact  benchmarks.  These 
proposals which are mutually reinforcing should facilitate investments in sustainable projects 
and assets across the EU.  

In  particular,  this  proposal  sets  out  uniform  criteria  for  determining  whether  an  economic 
activity  is  environmentally  sustainable.  It  further  sets  out  a  process  involving  a  multi-
stakeholder platform to establish a unified EU classification system based on a set of specific 
criteria, in order to determine which economic activities are considered sustainable. 

This  would  provide  economic  actors  and  investors  with  clarity  on  which  activities  are 
considered sustainable in order to inform their investment decisions. It would help ensuring 
that  investment  strategies  are  oriented  towards  economic  activities  which  are  genuinely 
contributing  to  the  achievement  of  environmental  objectives,  while  also  complying  with 
minimum  social  and  governance  standards.  Greater  clarity  on  what  can  be  considered  an 
environmentally sustainable investment will facilitate access to cross border capital market for 
environmentally sustainable investment.  

The  Commission’s  package  follows  global  efforts  towards  a  more  sustainable  economy. 
Governments from around the world have chosen a more sustainable path for our planet and 
our  economy  by  adopting  the  2016  Paris  Agreement  on  climate  change  and  the  United 
Nations (UN) 2030 Agenda for Sustainable Development.  

The  EU  is  committed  to  a  development  that  meets  the  needs  of  the  present  without 
compromising  the  ability  of  future  generations  to  meet  their  own  needs.  Sustainability  has 
since long been at the heart of the European project. The EU Treaties give recognition to its 
social and environmental dimensions, which should be addressed together. 

The  2016  Commission  Communication  on  the  next  steps  for  a  sustainable  European  future 
links  the  Sustainable  Development  Goals  (SDGs)1  of  the  UN  2030  Agenda  for  Sustainable 
Development  to  the  European  policy  framework  to  ensure  that  all  EU  actions  and  policy 
initiatives, within the EU and globally, take the SDGs on board at the outset. The EU is also 

1 

The 17 SDGs provide qualitative and quantitative objectives for the next 15 years to prepare ourselves 
for the future and work towards human dignity, stability, a healthy planet, fair and resilient societies and 
prosperous economies. 

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fully  committed  to  reaching  the  EU  2030  climate  and  energy  targets  and  to  mainstream 
sustainable development into EU policies, as announced in the 2014 Political Guidelines for 
the  European  Commission2  by  Jean-Claude  Juncker.  Therefore,  many  of  the  European 
Commission’s  policy  priorities  for  2014-2020  feed  into  the  EU  climate  objectives  and 
implement  the  2030  Agenda  for  Sustainable  Development.  These  include  the  Investment 
Plan  for  Europe,3  the  Circular  Economy  Package,4  the  Energy  Union  package,5  the 
Update of the EU Bioeconomy Strategy,6 the Capital Markets Union7 and the EU budget 
for  2014-2020,  including  the  Cohesion  fund  and  research  projects.  In  addition,  the 
Commission launched a multi-stakeholder platform to follow-up and exchange best practices 
on SDG implementation. 
Achieving EU sustainability goals requires important investments. In the climate and energy 
space alone, it is estimated that an additional annual investment of EUR 180 billion is needed 
to meet climate and energy targets by 2030.8 A substantial part of these financial flows will 
have  to  come  from  the  private  sector.  Closing  this  investment  gap  means  significantly 
reorienting  private  capital  flows  towards  more  sustainable  investments  and  requires  a 
comprehensive rethinking of the European financial framework. 

In this context, the Commission established in December 2016 a High-Level Expert Group 
(HLEG)  to  develop  an  EU  strategy  on  sustainable  finance.  The  HLEG  published  its  final 
report9  on  31  January  2018.  This  report  provided  a  comprehensive  vision  on  sustainable 
finance for Europe and identified two imperatives for Europe's financial system. The first is to 
improve  the  contribution  of  finance  to  sustainable  and  inclusive  growth.  The  second  is  to 
strengthen financial stability by incorporating Environmental, Social and Governance (ESG) 
factors  into  investment  decision-making.  The  HLEG  issued  eight  key  recommendations, 
which  it  believes  are  essential  building  blocks  of  a  sustainable  European  financial  system. 
Among these recommendations, the HLEG calls for the establishment of a technically robust 
classification system at EU level to provide clarity on what is 'green' or 'sustainable'  – a so-
called  sustainability  taxonomy.  The  advice  of  the  expert  group  was  to  start,  as  a  first  step, 
with  establishing  when  an  economic  activity  can  be  considered  as  environmentally 
sustainable. 

To follow-up on the work of the HLEG, the Commission published an Action Plan on Financing 
Sustainable Growth10 on 8 March 2018. This committed it to tabling a legislative proposal in Q2 
2018  ensuring  the  gradual  development  of  an  EU  taxonomy  for  climate  change  and 
environmentally and socially sustainable activities, building on existing work where relevant. The 
aim  is  to  embed  the  future  EU  taxonomy  in  EU  law  and  provide  the  basis  for  using  that 
classification system in different areas (e.g. standards, labels, sustainability benchmarks). 

2 

A  New  Start  for  Europe:  My  Agenda  for  Jobs,  Growth,  Fairness  and  Democratic  Change  -  Political 
Guidelines for the next European Commission, Strasbourg, 15 July 2014 available at: 

https://ec.europa.eu/commission/sites/beta-political/files/juncker-political-guidelines-speech_en.pdf  
3 
4 
5 
6 

COM(2014) 0903 final.  
COM(2015) 614 final. 
COM(2015) 80 final. 
Commission  Staff  Working  Document  on  the  review  of  the  2012  European  Bioeconomy  Strategy 
(SWD(2017) 374 final).. 
COM(2015) 468 final. 
The estimate is a yearly average investment gap for the period 2021 to 2030, based on PRIMES model 
projections used by the European Commission in the Impact Assessment of the Proposal of the Energy 
Efficiency 
http://eur-lex.europa.eu/legal-
available 
content/EN/TXT/?qid=1483696687107&uri=CELEX:52016SC0405. 
EU High-Level Expert Group on Sustainable Finance Final Report, Financing a Sustainable European 
at:  https://ec.europa.eu/info/sites/info/files/180131-sustainable-finance-final-
Economy, 
report_en.pdf  
COM(2018) 97 final. 

7 
8 

9 

10 

Directive 

available 

(2016), 

at: 

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• 

Consistency with existing policy provisions in the policy area 

The proposal  establishes the criteria and the process to  identify environmentally  sustainable 
investment, to ensure that the single market is not distorted by different interpretations of this 
concept across Member States. This proposal is consistent with other policy provisions in the 
policy  area  of  the  single  market  and  financial  markets,  as  it  does  not  interfere  with  any 
existing  provision  but  allows  existing  and  future  legal  provisions  to  use  and  build  on  the 
common  concept  of  environmentally  sustainable  investment  in  the  future.  There  are  no 
differences from or inconsistencies with other single market policy provisions. 

• 

Consistency with other Union policies 

The  proposal  complements  existing  EU  environmental  and  climate  policies.  The  common 
understanding  of  what  constitutes  environmentally  sustainable  investment  will  complement 
existing EU environmental policies by providing a reference point which they can use in the 
future so that such policies develop more consistently across the Union. The proposal builds 
on  existing  policies  and  uses  the  concepts  developed  under  those  policies  to  ensure 
consistency.  It  builds  on  the  concepts  developed  under  the  7th  Environmental  Action 
Programme,11 the Water Framework Directive,12 the Action Plan for the Circular Economy,13 
the  Industrial  Emissions  Directive14  such  as  when  referencing  the  2030  Agenda  for 
Sustainable  Development,  the  Ecolabel  Regulation,15  the  Statistical  Classification  of 
the  European  Community  (NACE),16 
Economic  Activities 
the  Classification  of 
Environmental  Protection  Activities  and  Expenditure  (CEPA)  and  the  Classification  of 
Resource Management Activities (CReMA).17 

in 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 114 of the Treaty on the Functioning of the European Union (TFEU) confers on the 
European  Parliament  and  the  Council  the  competence  to  adopt  measures  for  the 
approximation  of  the  provisions  laid  down  by  law,  regulation  or  administrative  action  in 
Member  States  which  relate  to  the  establishment  and  functioning  of  the  internal  market. 
Article  114  TFEU  enables  the  EU  to  take  measures  to  eliminate  current  obstacles  to  the 
exercise of the fundamental freedoms and to prevent such obstacles from emerging, including 
those that make it difficult for economic operators, including investors, to take full advantage 
of the benefits of the internal market.  

Currently  Member  States  differ  in  their  interpretations  as  to  what  counts  as  sustainable 
investment. Some Member States have in place labelling schemes or market-led initiatives to 
determine  what  qualifies  as  green  for  investment  purposes,  others  do  not  have  any  rule  in 
place  but  are  likely  to  legislate  in  this  field  based  on  their  own  definition  of  sustainable 

11 
12 
13 
14 
15 
16 

17 

Decision No 1386/2013/EU. 
Directive 2000/60/EC. 
COM/2015/0614 final. 
Directive 2010/75/EU. 
Regulation (EC) No 66/2010.  
Regulation (EC) No 1893/2006 of the European Parliament 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 (OJ L 
393/1, 30.12.2006, p.1.) 
Annex 4 and 5 of Regulation (EU) No 538/2014 of the European Parliament and of the Council of 16 
April  2014  amending  Regulation  (EU)  No  691/2011  on  European  environmental  economic  accounts 
(OJ L 158, 27.5.2014). 

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investment. National labels based on different criteria as to which economic activities qualify 
as  environmentally  sustainable  make  it  difficult  for  investors  to  compare  green  investment, 
thus discouraging them from investing across borders.  

Existing divergences are also a burden on economic operators having to comply with different 
standards in different Member States. To address existing divergences and prevent any further 
barriers  to  the  internal  market  from  emerging,  this  proposal  establishes a  standard EU-level 
definition  of  what  qualifies  as  an  environmentally  sustainable  economic  activity  for 
investment  purposes.  The  purpose  of  this  proposal  is  to  standardise  the  concept  of 
environmentally  sustainable  investment  across  the  Union,  thereby  facilitating  investment  in 
environmentally  sustainable  economic  activities,  both  nationally  and  in  more  than  one  EU 
country. The standardised concept will also enable economic operators to attract investment 
from abroad more easily.  

Article 114 of the TFEU provides  the legal  basis on which the EU can  adopt this proposal, 
since  its  objective  is  to  facilitate  EU-wide  investment  in  sustainable  economic  activities, 
irrespective of national boundaries. 

• 

Subsidiarity (for non-exclusive competence)  

This proposal complies with the principle of subsidiarity, set out in Article 5 of the Treaty on 
European Union (TEU). This principle states that action may be taken at EU level only if the 
aims envisaged are not achievable at a lower level. 

The  existing  lack  of  clarity  as  to  what  constitutes  an  environmentally  sustainable  economic 
activity could be exacerbated if Member States attempt to take action in that field in parallel, 
without  coordination.  Given  the  commitments  to  environmental  and  climate  policy  goals  at 
both  international  (e.g.  Paris  Agreement)  and  EU  level,  more  and  more  Member  States  are 
likely to explore the option of introducing labels for sustainable financial products, using their 
own bespoke taxonomies. This would exacerbate national barriers to the operation of capital 
markets for  raising funds for sustainable projects. Diversifying classification systems would 
increase market fragmentation and raise competition problems, making it more difficult and 
costly for investors to understand what is and what is not sustainable.  

The  criteria  for  determining  what  constitutes  a  sustainable  activity  for  investment  purposes 
should  therefore  be  standardised  at  EU  level.  Subsequently,  a  uniform  EU  classification 
system should be established through a process involving all relevant stakeholders. This will 
make it easier for economic operators to attract capital for sustainable investment from across 
the  EU.  It  will  be  a  first  step  towards  tackling  ‘greenwashing’  and  will  make  it  easier  for 
investors  to  identify  the  criteria  applied  when  classifying  a  financial  product  as  'green'  or 
sustainable.  The  proposal  is  thus  designed  to  address  the  shortcomings  of  the  existing  legal 
framework by establishing  standard criteria for ascertaining what counts as environmentally 
sustainable investment. EU-level action is more effective in guaranteeing uniformity and legal 
certainty as regards the exercise of Treaty freedoms. 

• 

Proportionality 

This  proposal  complies  with  the  principle  of  proportionality  set  out  in  Article  5  TEU.  The 
proposed measures create incentives for investing in green activities without penalising other 
investments.  They  are  necessary  to  make  matters  clear  for  investors  by standardising  at  EU 
level the criteria used to ascertain the degree of an investment’s environmental sustainability. 
Providing  standard  criteria  will  make  it  easier  for  investors  to  identify  the  relative 

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environmental  sustainability  of  a  given  investment,  and  to  compare  investments  both 
nationally and across Member States.  

The  proposal  is  designed  to  address  the  divergence  of  existing  national  taxonomies  and 
market-based initiatives at national level, in order to tackle the risk of ‘greenwashing’, make it 
easier for economic operators to raise funds for environmentally sustainable activities across 
borders, and to try to establish a level playing field for all market participants.  

As  regards  the  costs  of  such  harmonisation  on  financial  market  participants,  the  proposal 
introduces a disclosure obligation only for those who offer financial products that they claim 
to  be  environmentally  sustainable.  This  will  become  applicable  only  once  the  EU 
classification  system  has  been  developed.  Moreover,  the  approach  taken  in  this  proposal 
provides enough flexibility for Member States to decide on specific details of national labels, 
such  as  flexibility  for  financial  market  participants  as  regards  the  degree  to  which  the 
financial product being offered contains assets considered environmentally sustainable under 
the EU classification system.  

Consequently, the proposal does not go beyond what is necessary to tackle the issues at EU 
level. 

• 

Choice of the instrument 

This  proposal  is  designed  to  standardise  the  way  in  which  an  investment’s  degree  of 
environmental  sustainability  is  determined,  by  laying  down  the  criteria  such  an  investment 
must fulfil, in order to avoid diverging national approaches. A different choice of instrument, 
such  as  a  non-legislative  measure  or  a  directive  providing  minimum  harmonisation,  would 
leave to Member States the discretion to define environmentally sustainable investment based 
on  divergent  classifications  of  economic  activities.  Such  discretion  could  make  the  single 
market  more  fragmented  and  mean  that  financial  products  with  a  poor  environmental 
performance will still be labelled as 'environmentally sustainable'. This proposal ensures that 
financial  market  participants  who  offer  financial  products  as  environmentally  sustainable 
investments or as investments with similar characteristics make it clear to investors why such 
products  can  be  considered  environmentally  sustainable,  building  on  uniform  criteria 
established  at  EU  level.  A  directly  applicable  regulation,  providing  full  harmonisation,  is 
necessary to achieve these policy objectives. A regulation is thus the best way to achieve full 
harmonisation, avoid divergences and thus ensure greater clarity for market participants.  

RESULTS 

3. 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

OF 

EVALUATIONS, 

STAKEHOLDER 

• 

Stakeholder consultations 

Stakeholders’ views were gathered through a public consultation on the Interim Report by the 
High  Level  Expert  Group  on  sustainable  finance,  and  targeted  interviews  of  financial 
institutions, conducted  by the Commission.  Stakeholders were asked what an EU taxonomy 
should  cover,  whether  they  saw  a  need  for  regulatory  intervention,  and  what  scope  an  EU 
taxonomy  should  initially  have.  The  views  gathered  on  these  three  themes  may  be 
summarised as follows: 

 

EU regulatory intervention - most respondents were in favour of developing a 
taxonomy (i.e. a classification of sustainable economic activities) at EU level. 
Many  of  them  said  an  EU  taxonomy  should  build  upon,  or  at  least  take  into 
account, existing international frameworks (e.g. UN SDGs) and classifications 

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(e.g.  the  work  of  the  Climate  Bonds  Initiative,  Eurosif,  the  Task  Force  on 
Climate-Related Financial Disclosures, etc.). 

Scope  -  a  majority  of  the  respondents  indicated  that  an  EU  taxonomy  should 
eventually  cover  all  sustainability  objectives  (environment  and  social).  Some 
respondents favoured a step-by-step approach starting with environment. 

Level of detail - views differed as regards the level of detail an EU taxonomy 
should have. While the financial industry generally favoured a non-prescriptive 
taxonomy, other stakeholders (private individuals and civil society) preferred a 
more detailed taxonomy, providing clear definitions and (measureable) criteria. 

The Commission's proposal is  broadly  in  line with  the stakeholders' views in  so far as  it: i) 
sets  out  uniform  criteria  and  a  clear  process  for  the  establishment  of  a  taxonomy  of 
environmentally  sustainable  activities  in  a  legally  binding  act,  based  on  environmental 
objectives; ii) ensures that the EU taxonomy is built on existing international frameworks and 
is  granular and  detailed  enough  to  provide the basis  for  a common  and  unique  language  on 
sustainability; iii) provides for a review clause to possibly cover also social objectives. This 
should address the current fragmentation and bring the needed clarity for investors as to what 
environmentally sustainable economic activities are. 

• 

Collection and use of expertise 

The  proposal  is  built  on  the  High  Level  Expert  Group  on  sustainable  finance's  final  report 
which recommends to establish and maintain a common sustainability taxonomy at EU level. 
According to this report, this shared EU classification of sustainable activities, should: 

 

 

 

 

be  aligned  with  the  EU’s  declared  public  policy  goals,  including  the 
implementation of the Paris Agreement, the SDGs; 

give capital market participants guidance on the relevance of specific activities 
or the contribution they make; 

the  parameters  of  the  taxonomy  and  the  data  underpinning  them  should  be 
freely accessible, and should be developed through a multi-stakeholder process 
so as to ensure market buy-in; 

be an evolving tool. The science around sustainability is dynamic and evolving, 
as are social expectations as well as investor and market needs. Therefore, the 
taxonomy should be considered to represent the best of our currently available 
knowledge and will require continuous review. 

The  proposal  also  builds  upon  a  study  'Defining  "green"  in  the  context  of  green  finance' 
commissioned by the Commission in 2017 presenting: 

 

 

 

an overview and analysis of worldwide efforts to define ‘green’ in the context 
of green bonds, lending and listed equity; 

the  means  and  scope  for  identifying  'green'  assets  and  activities  through 
conceptual  definitions, 
ratings  methodologies  and  other 
mechanisms; 

taxonomies, 

a list  of available 'green' definitions, descriptions and assessments of selected 
definitions, as well as a comparison of available 'green' sectoral taxonomies. 

This proposal launches a gradual process for the establishment of an EU classification system, 
involving  a broad range of stakeholders with  the relevant knowledge  and expertise. As first 

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step,  this  proposal  sets  out  the  framework  to  establish  uniform  criteria  to  show  when  an 
economic  activity  can  be  considered  as  environmentally  sustainable.  The  Commission  will 
afterwards  identify  the  activities  which  will  qualify  as  sustainable  while  drawing  on  the 
technical advice of a platform on sustainable finance consisting of experts. 

This approach reflects the fact that knowledge of environmental impacts and expertise in the 
field  are  developing  rapidly.  The  legal  framework  must  therefore  remain  flexible,  so  that  it 
can  be  updated  where  necessary  in  the  light  of  future  scientific,  technological  and  market 
developments. Secondly, this proposal takes account of the high level of complexity, detail, 
granularity and, hence, resources required; this is such that the EU classification will need to 
be developed gradually, starting with those environmental areas where action is most urgently 
needed and knowledge is more advanced.  

• 

Impact assessment 

The proposal takes into account the opinions (the positive opinion with reservations issued on 
14  May  2018  and  the  previous  two  negative  opinions)  issued  by  the  Regulatory  Scrutiny 
Board (RSB). The proposal and revised impact assessment address the comments of the RSB, 
which concluded in their opinions that adjustments were necessary before proceeding further 
with this initiative. 
Comments received as part of the positive third opinion focused on: 

 

 

ensuring clarity regarding the operationalisation of the notions of 'do no harm' 
and 'contributing substantially to sustainability'; 

ensuring  that  the  monitoring  and  evaluation  framework  includes  issues  and 
risks  that  have  to  be  taken  into  account  when  developing  the  technical 
screening criteria; 

 

making more transparent the cost-benefit trade-off when comparing options 

These concerns were addressed in the final and revised version of the impact assessment. 
Comments received from the RSB previously were fully addressed both in the proposal and 
the accompanying revised impact assessment and can be grouped into three broader areas of 
concern: 
First, and more generally, the RSB suggested that the impact assessment should better explain 
the  scope,  sequencing  and  coherence  of  the  various  measures,  including  the  taxonomy  and 
how  it  relates  to  the  other  proposals.  As  such,  the  final  version  of  the  impact  assessment 
benefitted from the following improvements: 

 

 

 

 

 

the immediate and potential future uses of the taxonomy were better described, 
as well as how it would be operationalised; 

it  was  clarified  that  the  nature  and  magnitude  of  the  costs  on  stakeholders 
would  be  impact-assessed  before  the  adoption  of  each  delegated  act 
establishing the technical screening criteria;  

the consistency and complementarity with existing EU legislation and policies 
in other areas (e.g. environment and climate, energy, transport) was explained;  

the sequencing and the interactions between 'an environmental taxonomy' and a 
'social taxonomy' were explained; 

how the taxonomy would be expanded and updated over time was clarified and 
the associated administrative costs estimated;  

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 

it was clarified how the co-legislators would be informed/involved throughout 
the development of the technical screening criteria. 

Second, and  more specifically, the RSB expressed concerns regarding the immediate use  of 
the taxonomy and the risks associated with making such use mandatory for financial market 
participants before the taxonomy has reached sufficient stability and maturity. The proposed 
legal  text,  based  on  the  final  and  revised  impact  assessment,  addresses  this  concern  as 
follows: 

 

A  number  of  provisions  in  this  proposal  ensure  that  the  taxonomy  will 
only be used once it is stable and mature, in order to avoid disproportionate 
costs on financial market participants.  The aim of these safeguards is that the 
use of the taxonomy will only come at the end of a consultative process with 
stakeholders  which  has  created  buy-in  and  a  good  understanding  of  the 
concept: 

– 

– 

– 

Article 18 lays down that the operational part of this regulation (articles 3 
to 12) will enter into application six months after the entry into force of 
the delegated acts. This means that financial market participants will not 
be  required  to  apply  the  criteria  for  environmentally  sustainable 
economic activities until they have had sufficient time to prepare for and 
familiarise themselves with the rules and their application. 

Financial  market  participants  who  market  financial  products  as 
environmentally  sustainable  will  be  required  to  provide  appropriate 
disclosure.  However,  this  proposal  ensures  that  relevant  disclosure 
obligations are such that they do not place a disproportionate burden on 
relevant financial market participants. Article 4 requires the disclosure of 
the  way  in  which  and  the  extent  to  which  criteria  determining  the 
environmental  sustainability  of  an  investment,  as  laid  out  by  the 
taxonomy,  were  taken  into  account  in  investment  decision-making 
processes.  The  delegated  acts  will  specify  the  exact  scope  of  this 
disclosure obligation, based on a thorough impact assessment.  

Administrators of low-carbon or positive carbon impact benchmarks will 
be  able  to  design  their  methodologies  and  the  related  disclosure 
obligations  without  being  obliged  to  use  the  taxonomy,  which  will 
constitute  only  a  reference  for  the  selection  of  the  benchmark's 
underlying assets. 

Third, the RSB was concerned about the way in which the six environmental objectives of the 
taxonomy,  as  laid  out  in  article  5,  will  be  operationalised,  particularly  with  regards  to  the 
notion of 'do no harm' and its interaction with existing Union legislation, as well as the notion 
of  'contributing  substantially  to  sustainability'.  A  related  concern  was  potential  issues  of 
distorting competition when stipulating heterogeneous criteria for different sub-sectors. These 
concerns were reflected in the impact assessment and the legal text addresses them as follows: 

 

The  recitals  emphasise  that  the  delegated  acts  determining  the  technical 
screening  criteria  for  each  of  the  six  environmental  objectives  will  be 
thoroughly impact assessed. The empowerment to the Commission sets out that 
both  sets  of  criteria  –  those  fulfilling  the  'do  no  harm'  requirement  and  those 
which  determine  an  activity's  'substantial  contribution  to  sustainability'  –  will 
be addressed together in single delegated acts for each of the six objectives.  

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 

 

 

 

Article  14(1)(d)  requires  that  the  development  of  the  technical  screening 
criteria takes into account any relevant existing EU legislation.  

Article 14(1)(h) requires that the technical screening criteria acknowledge the 
risk  of  stranded  assets  and  the  potential  impact  of  the  proposed  measures  on 
market  liquidity.  These  risks,  as  well  as  any  possible  risks  of  providing 
inconsistent  incentives,  will  be  rigorously  assessed  when  developing  the 
technical screening criteria as part of the delegated acts, described in article 14. 

Article 14(1)(i) sets out that the delegated acts will be developed objective by 
objective, for all relevant sectors, in order to not distort competition. Recital 27 
supports this provision. 

Article  18  provides  additional  safeguards  for  the  use  of  the  taxonomy  by 
financial market participants when deferring the application of the operational 
provisions  in  this  regulation.  This  ensures  that  additional  obligations  are  not 
imposed on financial market participants until sufficient clarity on the content 
of the taxonomy and compliance with it are in place. 

The proposal is in line with the conclusions of the impact assessment on the preferred option. 
The general policy alternatives examined in the impact assessment consisted of the following 
options: 

 

 

 

no EU action (Option 1) 

EU environmental taxonomy with a medium degree of granularity (Option 2) 

EU environmental taxonomy with a high degree of granularity (Option 3) 

Under the first option, market-led or market-based initiatives with different scopes are likely 
to  be  further  developed  and  compete  with  classifications  developed  by  public  bodies  in  the 
future (e.g. the EIB) and hence no coherent and univocal classification system on sustainable 
activities  in  the  medium  to  long-term  will  emerge.  This  is  likely  to  limit  the  possibility  of 
redirecting  capital  flows  towards  sustainability  goals.  Option  2  foresees,  on  the  other  hand, 
the identification of six EU environmental objectives and the identification and classification 
of  economic  activities  (grouped  by  macro-sectors,  sectors  and  sub-sectors)  that  contribute 
unambiguously  to  any  of  them.  However,  the  lack  of  more  granular  technical  screening 
criteria raises doubts about (i) how 'green' the taxonomy under option 2 really is (as it might 
favour  economic  activities  in  a  sub-sector  defined  as  'green'  even  if  they  have  poor 
environmental  performance)  and  (ii)  what  the  contribution  is  to  a  given  EU  environmental 
objective  (e.g.  the  lack  of  measurable  impacts  also  makes  the  collection  and  monitoring  of 
data more difficult).  

Option 3 – which instead foresees the development of technical screening criteria specific to 
sub-sectors and the EU environmental objective the sub-sectors contribute to – is the preferred 
option  as  it provides  full  clarity  on which  activities  are  environmentally  sustainable  by  also 
overcoming the main shortcomings identified under the less granular taxonomy (Option 2). In 
terms  of  economic  impacts,  a  uniform  classification  at  EU  level  would  help  to  determine 
which  activities  can  be  regarded  as  sustainable  and  send  appropriate  signals  to  economic 
actors,  as  it  would  'translate'  EU  policy  objectives  into  tangible  guidance  to  identify  the 
relevant  projects  or  investments.  It  could  therefore  help  orient  more  capital  flows  towards 
sustainable investments. This regulation is an important first step towards providing clarity on 
what constitutes a sustainable investment, but the taxonomy itself will be developed through 
delegated acts. The impacts on stakeholders depend on the final uses of the taxonomy and on 
the details of the taxonomy. In terms of costs, developing such a taxonomy will take time and 

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resources,  which  will  also  have  an  impact  on  the  EU  budget  (see  budgetary  implications 
section below). 

In terms of environmental impacts, once operational, the EU taxonomy is expected to have a 
positive  indirect  environmental  impact  in  the  EU.  Through  providing  clarity  on  what  is 
‘green’, it would facilitate investments in sustainable projects and assets across the EU. This 
would contribute to the achievement of the EU environmental goals e.g. lowering greenhouse 
gas  emissions  in  line  with  the  Paris  Agreement,  and  moving  to  a  resource-efficient  and 
circular  economy.  The  additional  investments  resulting  from  increased  transparency  and 
market  harmonisation  could  help  to  ensure  the  far-reaching  sustainable  transformation 
envisaged  by  the  environmental  policies  already  in  place  at  EU  and  Member  State  levels. 
Investments  in  green  sectors  (e.g.  renewable  energy,  energy  efficiency,  waste  management, 
term 
environmental  restoration)  would 
environmental  benefits  such  as  reduced  pollution  levels  (e.g.  to  air,  water  and  soil)  with 
related  health  benefits,  reduced  greenhouse  gas  emissions  mitigating  dangerous  climate 
change and the preservation and enhancement of natural capital and eco-system services. 

immediate  and 

translate 

longer 

thus 

into 

In terms of social impacts, as the proposal contains minimum safeguards including on social 
aspects, some positive minimum social impacts are also to be expected. More important social 
impacts could be expected once the proposed initiative is reviewed to eventually cover social 
objectives and socially sustainable activities as per the review clause. 

• 

Fundamental rights 

The  proposal  respects  the  fundamental  rights  and  observes  the  principles  recognised  by  the 
Charter of Fundamental Rights of the European Union given the obligation that the identified 
environmentally  sustainable  economic  activity  has  to  be  carried  out  respecting  some 
minimum social and governance safeguards. 

4. 

BUDGETARY IMPLICATIONS  

The  proposal  includes  an  article  on  the  creation  of  a  Platform  on  Sustainable  Finance.  This 
Platform will assist the Commission in the progressive development and the update of the EU 
classification system. It will carry out  other tasks necessary to  achieve the objectives of the 
sustainable finance action plan, and particularly advise the Commission on the need to amend 
the framework set out by this proposal. It will also be tasked to monitor and report regularly 
to the Commission on capital flows towards sustainable investment.  

The European Supervisory Authorities (ESAs) will play a key role in the development of the 
EU sustainability taxonomy to ensure that it is usable by financial institutions, applicable to 
financial  products  and  compatible  with  the  EU  financial  legislation.  The  ESAs  will  play  an 
important role in ensuring that the EU sustainability taxonomy is developed in such a way that 
it is useful for climate scenario analysis and, at a later stage, for climate stress testing. In order 
to  accomplish  these  and  other  tasks,  each  authority  would  need  1  additional  full-time 
employee as of 2020 when the different provisions of the proposal are expected to enter into 
application.  

It  should  be  noted  that  any  budgetary  demands  from  the  ESAs  will  still  be  subject  to  all 
accountability  and  audit  mechanisms  put  in  place  in  the  ESAs'  Regulations  for  the 
preparation, adoption and execution of their annual budgets. Moreover, the annual decision on 
the EU balancing contribution to the ESAs and their establishment plans (e.g. decision on the 
staffing  level)  would  still  be  authorised  by  the  European  Parliament  and  the  Council,  and 
subject to discharge from the European Parliament on a recommendation from the Council.  

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The European Environmental Agency (EEA) will also be closely involved in the sustainable 
finance  work,  in  particular  by  providing  its  technical  knowledge  in  various  environmental 
areas  to  develop  and  maintain  the  EU  sustainability  taxonomy  for  all  climate-related  and 
environmental  issues.  The  EEA  will  also  collect  and  provide  data  on  investment  needs  and 
flows  in  EU  Member  States  as  part  of  the  Sustainable  Finance  Observatory,  and  provide 
advice to EU Member States in order to develop their low-carbon and sustainable investment 
strategies. In order to accomplish these and other tasks, the EEA would need 2 additional full-
time employees as of 2020.  

The European Commission will be responsible for managing the Platform (e.g. organising its 
meetings  and  meetings  of  any  sub-groups,  reporting  on  the  outcome,  preparing  legislative 
proposals,  liaising  with  the  ESAs  and  the  EEA,  maintaining  an  IT  collaborative  tool, 
reimbursing experts, performing other secretarial tasks, etc). In order to accomplish these and 
other tasks, the European Commission would need 10 full-time employees as of 2020 (8 AD 
and 2 AST). 

The  financial  and  budgetary  impact  of  this  proposal  is  explained  in  detail  in  the  legislative 
financial statement annexed to this proposal.  

It  should  be  noted  that  the  information  provided  in  the  legislative  financial  statement  is 
compatible with the post-2020 MFF proposal.  

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The uniform criteria for determining environmentally sustainable economic activities will be 
developed  and  operationalised  through  subsequent  delegated  acts,  which  will  define  the 
technical  screening  criteria.  Those  delegated  acts  will  be  duly  impact  assessed.  The 
development  of  the  technical  screening  criteria  will  take  into  account,  in  particular,  their 
impact on competition within and between industries, on existing green financial products and 
markets,  and  on  liquidity  in  financial  markets  as  well  as  potential  risks  of  delivering 
inconsistent incentives.  

Evaluation and reporting is foreseen every three years after the entry into application of this 
Regulation.  The  Commission  is  to  publish  a  report  on  the  application  of  this  Regulation, 
evaluating  the  progress  on  its  implementation  to  develop  technical  screening  criteria  for 
environmentally sustainable economic activities and the possible need to revise the criteria set 
out in this Regulation for considering an economic activity environmentally sustainable. 

The  Commission  should  also  assess  whether  it  is  appropriate  to  set  up  a  verification 
mechanism  to  verify  compliance  with  the  application  of  the  criteria  for  determining  the 
environmental sustainability of an economic activity.  

Finally, the Commission should evaluate whether it is appropriate to extend the scope of this 
Regulation to cover other sustainability objectives, in particular social objectives, as well as 
the use of the common notion of environmentally sustainable investment in Union law, and at 
Member State level. 

Any  future  Commission  legislative  proposals  providing  for  the  binding  use  of  the  EU 
classification  of  environmentally  sustainable  activities  in  further  areas  will  be  subject  to 
impact assessments, in line with the Better Regulation principles.  

The  Commission  is  required  to  forward  its  report  to  the  European  Parliament  and  to  the 
Council.  The  Commission  is  required  to  make  proposals  to  amend  this  Regulation  as 
appropriate.  

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• 

Detailed explanation of the specific provisions of the proposal 

Article 1 sets out the subject matter and the scope of this Regulation.  

This  proposal  establishes  the  framework  to  set  out  uniform  criteria  to  determine  the 
environmental  sustainability  of  an  economic  activity,  exclusively  for  the  purposes  of 
determining the degree of sustainability of an investment.  

This  proposal  provides  the  basis  to  establish  the  environmental  sustainability  of  economic 
activities,  rather  than  that  of  companies  or  assets.  Therefore  it  does  not  harmonise  the 
methodology  to  determine  the  environmental  sustainability  of  an  investment  in  certain 
companies or assets. However, the uniform criteria for environmentally sustainable activities 
will permit to determine the degree of environmental sustainability of a given company, for 
the  purposes  of  investment.  If  a  company  performs  only  environmentally  sustainable 
activities,  the  investment  in  this  company  is  deemed  environmentally  sustainable.  Thus,  a 
share  of  this  company  will  be  an  environmentally  sustainable  asset.  Those  companies  that 
perform several activities and only some of them are environmentally sustainable, may have 
different degrees of environmental sustainability, that can be determined, for instance, based 
on the proportion of turnover that originates from sustainable activities as compared to other 
activities. The assets that are used to finance only the environmentally sustainable activities of 
the  company  (e.g.  certain  types  of  bonds)  will  be  considered  environmentally  sustainable 
investments, while other assets may have a different degree of environmental sustainability. 
The  degree  of  environmental  sustainability  can  similarly  be  determined  for  investment 
portfolios  consisting  of  several  companies,  which  will  incentivise  investments  into 
environmentally sustainable economic activities, without penalising or creating disincentives 
for investments into other economic activities.  

This  Regulation  applies  to  Member  States  and  the  Union  in  the  context  of  marketing 
requirements  for  market  actors  and  the  offering  of  financial  products  or  corporate  bonds 
pursuing environmental objectives, in particular in the context of labelling. 

This  Regulation  does  not  establish  a  label  for  sustainable  financial  products.  Instead,  it 
provides the framework to set out the criteria that need to be taken into account when setting 
up such labels at national or EU level. Thus, this Regulation does not prevent Member States 
from keeping in place, or further developing, labelling schemes – as long as they comply with 
the criteria set out here for environmentally sustainable economic activities. 

In  the  future,  if  a  label  for  financial  products  is  developed  under  the  Ecolabel  Regulation, 
already  existing  national  labelling  schemes  can  co-exist  with  that  Ecolabel,  provided  they 
comply with the conditions set out in Article 11 of the Ecolabel Regulation. 

This  proposal  is  linked  with  the  proposal  for  a  Regulation  on  improving  sustainability 
disclosures  [Commission  proposal  for  a  Regulation  on  disclosures  relating  to  sustainable 
investments and sustainability risks and amending Directive (EU) 2016/2341].  

This Regulation requires those financial market participants that are subject to the disclosure 
obligations  set  out  in  the  proposed  Regulation  on  improving  sustainability  disclosure 
referenced above (e.g. fund managers) to disclose the degree of environmental sustainability 
of those financial products that they claim pursue environmental objectives. 

If a fund manager offers a fund claiming it is a 'green fund', then for that particular fund the 
manager will have to indicate the way and the extent to which the criteria for environmentally 

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sustainable economic activities were used to determine the environmental sustainability of the 
investment in the fund's pre-contractual disclosure document.  

The scope of this obligation will be specified by delegated acts once the technical screening 
criteria for environmentally sustainable activities are developed.  

This  disclosure obligation will help investors better understand the degree  of environmental 
sustainability of a financial product, and better compare them before making their investment 
decisions. 

This Regulation sets out provisions framing the process for the development of the technical 
screening criteria underpinning the establishment of the EU classification of environmentally 
sustainable economic activities.  

It provides for a gradual entry into application of the Regulation only once the classification’s 
criteria  for  each  environmental  objective  are  sufficiently  mature  and  stable,  allowing  for  a 
consultative  process  with  stakeholders  to  create  buy-in  and  a  good  understanding  of  the 
concept among relevant financial market participants.  

Article 2 contains the definitions of terms used in this Regulation.  

The definitions of financial market participants and of financial products are those set out in 
the proposal for a Regulation on improving sustainability disclosures.  

Article 3 sets out the criteria for determining the environmental sustainability of an economic 
activity,  for  the  purpose  of  establishing  the  degree  of  environmental  sustainability  of  an 
investment. Those criteria require that the economic activity contributes substantially to one 
or  more  environmental  objectives  and  does  not  significantly  harm  any  of  the  others. 
Recognising the principles enshrined in the European Pillar of Social Rights, they also require 
that  the  economic  activity  is  carried  out  in  compliance  with  minimum  social  and  labour 
international standards. 

Once  the  Commission  specifies,  via  delegated  acts,  the  technical  screening  criteria  for 
determining  what  constitutes  a  substantial  contribution  to  an  environmental  objective  and 
what constitutes substantial harm to other objectives, those criteria also apply.  

Article 4 establishes obligations on Member States and financial market participants to use the 
criteria set out in Article 3 in specific cases.  

It  provides  that  both  Member  States  and  the  Union  use  the  uniform  criteria  for 
environmentally  sustainable  economic  activities  when  setting  out  the  requirements  for 
marketing financial products or corporate bonds as environmentally sustainable, in particular 
in the context of labelling schemes (e.g. for green bonds). It sets out a disclosure obligation on 
asset managers and institutional investors offering financial products, which are marketed as 
environmentally sustainable or as investments with similar characteristics, the scope of which 
will be further specified in the Commission’s delegated acts.  

In  accordance  with  article  18,  these  obligations  will  become  applicable  only  once  the 
Commission  specifies  the  technical  criteria  to  be  used  to  determine  when  an  activity 
contributes  substantially  to  a  given  environmental  objective  and  does  not  cause  significant 
harm to the other objectives. 

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Article 5 establishes that for the purpose of this Regulation, the environmental objectives are 
the following: 1) climate change mitigation; 2) climate change adaptation; 3) sustainable use 
and  protection  of  water  and  marine  resources;  4)  transition  to  a  circular  economy,  waste 
prevention  and  recycling;  5)  pollution  prevention  and  control;  (6)  protection  of  healthy 
ecosystems.  

Articles 6 to 11 further define the criteria for a substantial contribution to each environmental 
objective. 

The Commission is empowered to adopt delegated acts to specify technical screening criteria 
for what qualifies as a substantial contribution to a given environmental objective for a given 
economic activity and what is considered to cause significant harm to other objectives. 

Each article indicates the date of adoption of the relevant delegated act, so to provide for the 
progressive  development  of  the  EU  classification  based  on  the  technical  screening  criteria. 
Those related to climate change mitigation and adaptation will be adopted first (by December 
2019). Those related to the other objectives will be progressively established and applied by 
December 2021 (transition to a circular economy, waste prevention and recycling as well as 
pollution  prevention  and  control)  and  by  December  2022  (sustainable  use  and  protection  of 
water and marine resources and protection of healthy ecosystems). 

Article 12 sets out the details for the criteria for determining when an economic activity harms 
any environmental objective significantly. 

Article 13 sets out minimum safeguards by reference to the principles and rights set out in the 
eight  fundamental  conventions  identified  in  the  International  Labour  Organisation’s 
declaration on Fundamental Rights and Principles at Work. 

Article 14 further frames the Commission empowerment by setting out the requirements for 
the technical screening criteria to be established by delegated acts.  

In particular, it requires that those criteria build on standards and labels which exist already at 
Union level, setting out environmental sustainability criteria in other contexts (such as product 
labelling, environment protection, etc). As those standards do not automatically translate into 
investable  assets,  the  technical  criteria  should  operationalise  them  for  the  purposes  of 
investments.  

Those  criteria  should  also  take  into  account  the  requirements  set  out  in  existing  EU 
legislation, in particular to determine the minimum requirements that needs to be met to avoid 
significant harm to an environmental objective. This implies an assessment of whether or not 
existing requirements are sufficient to that purpose.  

The  technical  screening  criteria  should  be  practicable,  easy  to  apply,  and  verifiable  within 
reasonable cost-of-compliance boundaries, and provide for sufficient legal clarity.  

When establishing the technical screening criteria, the Commission should assess the use of 
possible  different  eligibility  criteria per  economic  sector  and  subsector, and  should strive to 
ensure that the ease with which an economic operator could engage in an activity that would 
be considered sustainable, is largely the same by sector.  

The  Commission  should  also  take  into  account  the  potential  impact  of  these  criteria  on  the 
valuation  of  those  assets  that  until  the  adoption  of  the  technical  screening  criteria  were 

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considered  as  'green'  assets  under  existing  market  practices.  It  should  assess  whether  these 
criteria  for  sustainable  activities  would  give  rise  to  stranded  assets  and  the  risk  that  certain 
assets lose value as a result of the transition to a more sustainable economy, as well as the risk 
of delivering inconsistent incentives.  

The technical screening criteria should also take into account impacts on market liquidity and 
competition. 

Article 15 requires the Commission to establish a Platform on sustainable finance consisting 
of  experts,  which  shall  advise  the  Commission  on  the  technical  screening  criteria.  The 
Platform will take the form of a Commission expert group established in accordance with the 
Horizontal rules on expert groups, and will replace the expert group previously put in place 
with similar tasks. 

Article 16 governs the exercise of the delegated powers. 

Article 17 contains a review clause, requiring the Commission to publish a report evaluating 
the  implementation  of  this  Regulation  and  the  possible  need  to  amend  it  by  31  December 
2021 and every three years thereafter. 

Article 18 sets out the date of entry into force and direct applicability of this Regulation. 

It defers the applicability of the Regulation to a date posterior to the adoption of the delegated 
acts  establishing  the  technical  screening  criteria,  for  each  environmental  objective.  Thus,  in 
respect of each of the environmental objectives, the provisions related to each environmental 
objective  will  become  applicable  only  six  months  after  the  technical  screening  criteria  are 
established, in order to give the market players that are concerned sufficient time to prepare. 

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2018/0178 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the establishment of a framework to facilitate sustainable investment 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 
thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Central Bank,18 
Having regard to the Opinion of the European Economic and Social Committee,19 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

18 
19 
20 

21 
22 
23 

Article 3(3) of the Treaty on European Union aims to establish an internal market that works 
for  the  sustainable  development  of  Europe,  based  among  others  on  balanced  economic 
growth and a high level of protection and improvement of the quality of the environment.  

On  25  September  2015,  the  UN  General  Assembly  adopted  a  new  global  sustainable 
development framework: the 2030 Agenda for Sustainable Development20 having at its core 
the  Sustainable  Development  Goals  (SDGs)  covering  three  pillars  of  sustainability: 
environmental,  social  and  economic/governance.  The  Commission's  Communication  of 
2016  on  the  next  steps  for  a  sustainable  European  future21  links  the  SDGs  to  the  Union 
policy  framework  to  ensure  that  all  Union  actions  and  policy  initiatives,  within  the  Union 
and globally, take the SDGs on board at the outset. The European Council conclusions of 20 
June  201722  confirmed  the  commitment  of  the  Union  and  the  Member  States  to  the 
implementation  of  the  2030  Agenda  in  a  full,  coherent,  comprehensive,  integrated  and 
effective manner and in close cooperation with partners and other stakeholders. 
In  2016,  the  Council  concluded  on  behalf  of  the  Union  the  Paris  Climate  Agreement23. 
Article 2(1)(c) of the Paris Climate Agreement sets the objective to strengthen the response 
to climate change, among other means by making finance flows consistent with a pathway 
towards low greenhouse gas emissions and climate-resilient development. 

OJ C , , p. . 
OJ C , , p. . 
Transforming  our  World:  The  2030  Agenda  for  Sustainable  Development  (UN  2015)  available  at 
https://sustainabledevelopment.un.org/post2015/transformingourworld. 
COM(2016) 739 final. 
CO EUR 17, CONCL. 5. 
Council Decision (EU) 2016/1841 of 5 October 2016 on the conclusion, on behalf of the European Union, of 
the Paris Agreement adopted under the United Nations Framework Convention on Climate Change (OJ L 282, 
19.10.2016, p. 4). 

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(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

24 

25 
26 

Sustainability  and  the  transition  to  a  low-carbon  and  climate  resilient,  more  resource-
efficient and circular economy are key in ensuring long-term competitiveness of the Union’s 
economy.  Sustainability  has  long  been  at  the  heart  of  the  European  Union  project  and  the 
Treaties give recognition to its social and environmental dimensions. 

In  December  2016,  the  Commission  mandated  a  High-Level  Expert  Group  to  develop  an 
overarching  and  comprehensive  Union  strategy  on  sustainable  finance.  The  report  of  the 
High-Level  Expert  Group  published  on  31  January  201824  calls  for  the  creation  of  a 
technically robust classification system at Union level to establish clarity on which activities 
are ‘green’ or ‘sustainable’, starting with climate change mitigation.  
In March 2018, the Commission published its Action Plan 'Financing Sustainable Growth'25 
setting  up  an  ambitious  and  comprehensive  strategy  on  sustainable  finance.  One  of  the 
objectives  set  out  in  that  Action  Plan  is  to  reorient  capital  flows  towards  sustainable 
investment  in  order  to  achieve  sustainable  and  inclusive  growth.  The  establishment  of  a 
unified  classification  system  for  sustainable  activities  is  the  most  important  and  urgent 
action  envisaged  by  the  Action  Plan.  The  Action  Plan  recognises  that  the  shift  of  capital 
flows towards more sustainable activities has to be underpinned by a shared understanding 
of  what  'sustainable'  means.  As  a  first  step,  clear  guidance  on  activities  qualifying  as 
contributing to environmental objectives, should help inform investors about the investments 
that fund environmentally sustainable economic activities. Further guidance on the activities 
contributing to other sustainability objectives, including social objectives, may be developed 
at a later stage. 
Decision No. 1386/2013/EU of the European Parliament and of the Council26 called for an 
increase in private sector funding for environmental and climate-related expenditure, notably 
through putting in place incentives and methodologies that stimulate companies to measure 
the  environmental  costs  of  their  business  and  profits  derived  from  using  environmental 
services. 

Achieving SDGs in the Union requires the channelling of capital flows towards sustainable 
investments.  It  is  important  to  exploit  fully  the  potential  of  the  internal  market  for  the 
achievement  of  those  goals.  It  is  also  important  to  ensure  that  capital  flows  channelled 
towards sustainable investment are not disrupted in the internal market.  

Offering  financial  products  which  pursue  environmentally  sustainable  objectives  is  an 
effective  way  of  channelling  private  investments  into  sustainable  activities.  National 
requirements  for  marketing  as  sustainable  investments  financial  products  and  corporate 
bonds, in particular requirements set out to allow the relevant market actors to use a national 
label, aim to enhance investor confidence, to create visibility and to address concerns about 
“greenwashing”.  Greenwashing  refers  to  the  practice  of  gaining  an  unfair  competitive 
advantage by marketing a financial product as environment-friendly, when in fact it does not 
meet basic environmental standards. Currently a few Member States have in place labelling 
schemes.  They  build  on  different  taxonomies  classifying  environmentally  sustainable 
economic  activities.  Given  the  political  commitments  under  the  Paris  Agreement  and  at 
Union level, it is likely that more and more Member States will set up labelling schemes or 
other  requirements  on  market  actors  in  respect  of  financial  products  or  corporate  bonds 
marketed as environmentally sustainable. In doing so, Member States would be using their 

at: 

available 

EU  High-Level  Expert  Group  on  Sustainable  Finance  Final  Report,  Financing  a  Sustainable  European 
Economy, 
https://ec.europa.eu/info/sites/info/files/180131-sustainable-finance-final-
report_en.pdf. 
COM(2018) 97 final. 
Decision  No.  1386/2013/EU  of  the  European  Parliament  and  of  the  Council  of  20  November  2013  on  a 
General Union Environment Action Programme to 2020 ‘Living well, within the limits of our planet’ (OJ L 
354/171 28.12.2013). 

EN 

17 

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own  national  taxonomies  for  the  purposes  of  determining  which  investments  qualify  as 
sustainable.  If  such  national  requirements  are  based  on  different  criteria  as  to  which 
economic  activities  qualify  as  environmentally  sustainable,  investors  will  be  discouraged 
from  investing  across  borders,  due  to  difficulties  in  comparing  the  different  investment 
opportunities. In addition, economic operators wishing to attract investment from across the 
Union would have to meet different criteria in the various Member States in order for their 
activities to qualify as environmentally sustainable for the purposes of the different labels. 
The absence of uniform criteria will thus increase costs and create a significant disincentive 
for economic operators, amounting to an impediment to access cross-border capital markets 
for  sustainable  investments.  The  barriers  to  access  to  cross-border  capital  markets  for  the 
purposes of raising funds for sustainable projects are expected to grow further. The criteria 
for  determining  whether  an  economic  activity  is  environmentally  sustainable  should 
therefore be harmonised at Union level, in order to remove obstacles to the functioning of 
the internal market and prevent their future emergence. With such harmonisation economic 
operators will find it easier to raise funding for their green activities across borders, as their 
economic  activities  can  be  compared  against  uniform  criteria  in  order  to  be  selected  as 
underlying  assets  for  environmentally  sustainable  investments.  It  will  therefore  facilitate 
attracting investment across borders within the Union.  

(10)  Moreover  if  market  participants  do  not  provide  any  explanation  to  investors  of  how  the 
activities  they  invest  in  contribute  to  environmental  objectives,  or  if  they  use  different 
concepts in their explanation of what is a ‘sustainable’ economic activity, investors will find 
it disproportionately burdensome to check and compare these different financial products. It 
has been found that this discourages investors from investing into green financial products. 
Furthermore, the lack of investor confidence has major detrimental effects on the market for 
sustainable  investment.  It  has  further  been  shown  that  national  rules  or  market-based 
initiatives  taken  to  tackle  this  issue  within  national  borders  will  lead  to  fragmenting  the 
internal  market.  If  financial  market  participants  disclose  how  the  financial  products  they 
claim  are  environment-friendly  meet  environmental  objectives,  and  they  use  for  such 
disclosures  common  criteria  across  the  Union  of  what  is  an  environmentally  sustainable 
economic  activity,  this  will  help  investors  compare  environment-friendly  investment 
opportunities  across  borders.  Investors  will  invest  in  green  financial  products  with  higher 
confidence across the Union, improving the functioning of the internal market.  

(11)  To  address  existing  obstacles  to  the  functioning  of  the  internal  market  and  to  prevent  the 
emergence  of  such  obstacles  in  the  future,  Member  States  should  be  required  to  use  a 
common  concept  of  environmentally  sustainable  investment  when  setting  up  requirements 
for market actors for the purpose of labelling financial products or corporate bonds marketed 
as  environmentally sustainable at  national  level. For the same reasons, fund  managers and 
institutional investors that hold themselves out as pursuing environmental objectives should 
use the same concept of environmentally sustainable investment when disclosing how they 
pursue those objectives. 

(12)  Establishing  criteria  for  environmentally  sustainable  economic  activities  may  encourage 
firms to disclose on their websites, on a voluntary basis, information on the environmentally 
sustainable economic activities they carry out. This information will not only help relevant 
actors  in  the  financial  markets  to  easily  identify  which  firms  carry  out  environmentally 
sustainable economic activities, but it will also facilitate for these firms to raise funding for 
their green activities. 

(13)  A Union classification of environmentally sustainable economic activities should enable the 
development of future Union policies, including Union-wide standards for environmentally 
sustainable  financial  products  and  eventually  the  establishment  of  labels  that  formally 
recognise compliance with those standards across the Union. Uniform legal requirements for 
considering  investments  as  environmentally  sustainable  investments,  based  on  uniform 

EN 

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(14) 

criteria for environmentally sustainable economic activities, are necessary as a reference for 
future Union legislation aiming at enabling those investments.  

In  the  context  of  achieving  SDGs  in  the  Union,  policy  choices  such  as  the  creation  of  a 
European  Fund  for  Strategic  Investment,  have  proven  to  be  effective  in  contributing  to 
channel  private  investment  alongside  public  spending  towards  sustainable  investments. 
Regulation  (EU)  2015/1017  of  the  European  Parliament  and  of  the  Council27  specifies  a 
40% climate investment target for infrastructure and innovation projects under the European 
Fund for Strategic Investment. Common criteria for the sustainability of economic activities 
could  underpin  future  similar  initiatives  of  the  Union  supporting  investment  pursuing 
climate-related or other environmental objectives.  

(15)  To  avoid  market  fragmentation  as  well  as  harm  to  consumer  interests  due  to  divergent 
notions  of  environmentally  sustainable  economic  activities,  national  requirements  that 
market actors should comply with when they wish to market financial products or corporate 
bonds  as  being  environmentally  sustainable,  should  build  on  the  uniform  criteria  for 
environmentally  sustainable  economic  activities.  Those  market  actors  include  financial 
market participants offering “green” financial products and non-financial companies issuing 
“green” corporate bonds.  

(16)  To  avoid  harming  consumer  interests,  fund  managers  and  institutional  investors  offering 
financial  products  as  environmentally  sustainable,  should  disclose  how  and  to  what  extent 
the  criteria  for  environmentally  sustainable  economic  activities  are  used  to  determine  the 
environmental  sustainability  of  the  investments.  The  information  disclosed  should  enable 
investors  to  understand  the  share  of  the  investment  funding  environmentally  sustainable 
economic  activities  as  a  percentage  of  all  economic  activities  and  thus  the  degree  of 
environmental  sustainability  of  the  investment.  The  Commission  should  specify  the 
information  that  needs  to  be  disclosed  for  that  purpose.  That  information  should  enable 
national  competent  authorities  to  verify  compliance  with  the  disclosure  obligation  easily, 
and to enforce that obligation in accordance with applicable national law.  

(17)  To avoid circumvention of the disclosure obligation, that obligation should also apply where 
financial  products  are  offered  as  having  similar  characteristics  as  environmentally 
sustainable investments, including those having as their target environmental protection in a 
broad  sense.  Financial  market  participants  should  not  be  required  to  invest  only  in 
environmentally sustainable economic activities determined in accordance with the technical 
screening  criteria  set  out  in  this  Regulation.  They  should  be  encouraged  to  inform  the 
Commission  if  they  consider  that  an  economic  activity  that  does  not  meet  the  technical 
screening  criteria,  or  for  which  such  criteria  have  not  been  established  yet,  should  be 
considered  environmentally  sustainable, 
the 
appropriateness of complementing or updating the technical screening criteria.  

the  Commission 

to  evaluate 

to  help 

(18)  For  the  purposes  of  determining  whether  an  economic  activity  is  environmentally 

sustainable, an exhaustive list of environmental objectives should be laid down.  

(19)  The  environmental  objective  of  protection  of  healthy  ecosystems  should  be  interpreted 
taking  into  account  relevant  legislative  and  non-legislative  instruments  of  the  Union, 
including Directive 2009/147/EC of the European Parliament and of the Council28, Council 

27 

28 

Regulation (EU) 2017/2396 of the European Parliament and of the Council of 13 December 2017 amending 
Regulations (EU) No 1316/2013 and (EU) 2015/1017 as regards the extension of the duration of the European 
Fund  for  Strategic  Investments  as  well  as  the  introduction  of  technical  enhancements  for  that  Fund  and  the 
European Investment Advisory Hub (OJ L 345, 27.12.2017, p. 34). 
Directive  2009/147/EC  of  the  European  Parliament  and  of  the  Council  of  30  November  2009  on  the 
conservation of wild birds (OJ L 020, 26.1.2010, p. 7). 

EN 

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Directive 92/43/EEC29, Regulation (EU) No 1143/2014 of the European Parliament and of 
the Council,30 the EU Biodiversity Strategy to 2020,31 the EU Green Infrastructure Strategy, 
Council Directive 91/676,32 Regulation (EU) No 511/2014 of the European Parliament and 
of  the  Council,33  Regulation  (EU)  No  995/2010  of  the  European  Parliament  and  of  the 
Council,34  the  Forest  Law  Enforcement,  Governance  and  Trade  Action  Plan,35  and  the 
Wildlife Trafficking Action Plan.36 

(20)  For each environmental objective, uniform criteria for considering economic activities to be 
substantially contributing to that objective should be laid down. One element of the uniform 
criteria should be to avoid significant harm to any of the environmental objectives set out in 
this  Regulation.  This  is  in  order  to  avoid  that  investments  are  considered  environmentally 
sustainable although the economic activities benefitting from those investments cause harm 
to  the  environment  to  an  extent  outweighing  their  contribution  to  an  environmental 
objective.  The  conditions  for  substantial  contribution  and  for  not  causing  significant  harm 
should  enable  investments  into  environmentally  sustainable  economic  activities  to  make  a 
real contribution to the environmental objectives. 

(21)  Recalling  the  joint  commitment  of  the  European  Parliament,  the  Council  and  the 
Commission  to  pursue  the  principles  enshrined  in  the  European  Pillar  of  Social  Rights  in 
support  of  sustainable  and  inclusive  growth  and  recognising  the  relevance  of  international 
minimum  human  and  labour  rights  and  standards,  compliance  with  minimum  safeguards 
should be a condition for economic activities to qualify as environmentally sustainable. For 
that  reason  economic  activities  should  only  qualify  as  environmentally  sustainable  where 
they  are  carried  out  observing  the  International  Labour  Organisation’s  (‘ILO’)  declaration 
on Fundamental Rights and Principles at Work and the eight ILO core conventions. The ILO 
core conventions define human and labour rights that companies are due to respect. Several 
of these international standards are also enshrined the Charter of Fundamental Rights of the 
European Union, in particular the prohibition of slavery and forced labour and the principle 
of non-discrimination. Those minimum safeguards are without prejudice to the application 
of  more  stringent  requirements  on  environment,  health  and safety  and  social  sustainability 
set out in Union law, where applicable. 

(22)  Given  the  specific  technical  details  needed  to  assess  the  environmental  impact  of  an 
economic activity and the fast-changing nature of both science and technology, the criteria 
of  environmentally  sustainable  economic  activities  should  be  adapted  regularly  to  those 
changes. For the criteria to be up to date, based on scientific evidence and input from experts 

29 

30 

31 

32 

33 

34 

35 

36 

Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and 
flora (OJ L 206, 22.7.1992, p. 7). 
Regulation  (EU)  No  1143/2014  of  the  European  Parliament  and  of  the  Council  of  22  October  2014  on  the 
prevention and management of the introduction and spread of invasive alien species (OJ L 317, 4.11.2014, p. 
35). 
Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social  Committee  and  the  Committee  of  the  Regions  -  Our  life  insurance,  our  natural  capital:  an  EU 
biodiversity strategy to 2020 (COM/2011/0244 final). 
Council Directive 91/676 of 12 December 1991 concerning the protection of waters against pollution caused 
by nitrates from agricultural sources (OJ L 375, 31.12.1991, p. 1). 
Regulation (EU) No 511/2014 of the European Parliament and of the Council of 16 April 2014 on compliance 
measures  for  users  from  the  Nagoya  Protocol  on  Access  to  Genetic  Resources  and  the  Fair  and  Equitable 
Sharing of Benefits Arising from their Utilization in the Union (OJ L 150, 20.5.2014, p. 59). 
Regulation (EU) No 995/2010 of the European Parliament and of the Council of 20 October 2010 laying down 
the obligations of operators who place timber and timber products on the market (OJ L 295, 12.11.2010, p. 23). 
Communication from the Commission to the Council and the European Parliament - Forest Law Enforcement, 
Governance and Trade (FLEGT) - Proposal for an EU Action Plan (COM/2003/0251 final). 
Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social  Committee  and  the  Committee  of  the  Regions  -  EU  Action  Plan  against  Wildlife  Trafficking 
(COM/2016/087 final). 

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as  well  as  relevant  stakeholders,  the  conditions  for  substantial  contribution  and  significant 
harm should be specified with more granularity for different economic activities and should 
be updated regularly. To that purpose, granular and calibrated technical screening criteria for 
the different economic activities should be laid down by the Commission, on the basis of the 
technical input of a multi-stakeholders Platform on Sustainable Finance.  

(23)  Some  economic  activities  have  a  negative  impact  on  the  environment,  and  a  substantial 
contribution  to  one  or  more  environmental  objectives  can  be  achieved  by  reducing  that 
negative  impact.  For  those  economic  activities,  it  is  appropriate  to  set  out  technical 
screening  criteria  that  require  a  substantial  improvement  in  environmental  performance 
compared  to,  inter  alia,  the  industry  average.  Those  criteria  should  consider  also  the  long 
term impact of a specific economic activity.  

(24)  An economic activity should not be considered environmentally sustainable if it causes more 
harm to the environment than the benefits it brings. The technical screening criteria should 
identify the minimum requirements necessary to avoid a significant harm to other objectives. 
When  establishing  and  updating  the  technical  screening  criteria,  the  Commission  should 
ensure  that  those  criteria  are  based  on  available  scientific  evidence  and  are  updated 
regularly.  Where  scientific  evaluation  does  not  allow  for  the  risk  to  be  determined  with 
sufficient certainty, the precautionary principle should apply, in line with Article 191 TFEU. 

(25)  When establishing and updating the technical screening criteria the Commission should take 
into  account  the  relevant  Union  law,  as  well  as  non-legislative  instruments  of  the  Union 
already in place, including the Regulation (EC) 66/2010 of the European Parliament and the 
Council37, the EU Eco-Management and Audit Scheme,38 the EU Green Public Procurement 
criteria39  and  the  on-going  work  on  Product  and  Organisation  Environmental  Footprint 
rules.40 To avoid unnecessary inconsistencies with classifications of economic activities that 
already exist for other purposes, the Commission should also take into account the statistical 
classifications  relating  to  the  Environmental  Goods  and  Services  Sector,  namely  the 
Classification  of  Environmental  Protection  Activities  and  Expenditure  (CEPA)  and  the 
Classification of Resource Management Activities (CReMA).41 

(26)  When establishing and updating the technical screening criteria the Commission should also 
take  into  account  the  specificities  of  the  infrastructure  sector  and  take  into  account 
environmental,  social  and  economic  externalities  within  a  cost-benefit  analysis.  In  that 
regard, the Commission should consider the work of international organisations, such as the 
OECD,  relevant  Union  legislation  and  standards,  including  Directive  2001/42/EC  of  the 
European  Parliament  and  of  the  Council42,  Directive  2011/92/EU  of  the  European 

37 

38 

39 

40 

41 

42 

Regulation  (EC)  66/2010  of  the  European  Parliament  and  the  Council  of  25  November  2009  on  the  EU 
Ecolabel (OJ L 27, 30.1.2010, p. 1). 
Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the 
voluntary  participation  by  organisations  in  a  Community  eco-management  and  audit  scheme  (EMAS), 
repealing  Regulation  (EC)  No  761/2001  and  Commission  Decisions  2001/681/EC  and  2006/193/EC  (OJ  L 
342, 22.12.2009, p. 1–45). 
Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social Committee and the Committee of the Regions Public procurement for a better environment {SEC(2008) 
2124} {SEC(2008) 2125} {SEC(2008) 2126} COM/2008/0400 final. 
2013/179/EU: Commission Recommendation of 9 April 2013 on the use of common methods to measure and 
communicate the life cycle environmental performance of products and organisations (OJ L 124, 4.5.2013, p. 
1–210). 
Annex 4 and 5 of Regulation (EU) No 538/2014 of the European Parliament and of the Council of 16 April 
2014  amending  Regulation  (EU)  No  691/2011  on  European  environmental  economic  accounts  (OJ  L  158, 
27.5.2014). 
Directive 2001/42/EC of the European Parliament and of the Council of 27 June 2001 on the assessment of the 
effects of certain plans and programmes on the environment (OJ L 197, 21.7.2001, p. 30). 

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Parliament  and  of  the  Council43  Directive  2014/23/EU  of  the  European  Parliament  and  of 
the  Council44,  Directive  2014/24/EU  of  the  European  Parliament  and  of  the  Council45, 
Directive  2014/25/EU  of  the  European  Parliament  and  of  the  Council46,  and  current 
methodology.  In  that  context,  the  technical  screening  criteria  should  promote  appropriate 
governance  frameworks  integrating  environmental,  social  and  governance  factors,  as 
referred  to  in  the  United  Nations-supported  Principles  for  Responsible  Investment47,  at  all 
stages of a project's lifecycle. 

(27)  To  avoid  distorting  competition  when  raising  financing  for  environmentally  sustainable 
economic activities, the technical screening criteria should ensure that all relevant economic 
activities within a specific sector can qualify as environmentally sustainable and are treated 
equally if they contribute equally towards one or more of the environmental objectives laid 
out  in  this  Regulation.  The  potential  capacity  to  contribute  towards  those  environmental 
objectives  may  however  vary  across  sectors,  which  should  be  reflected  in  the  criteria. 
However,  within  each  sector,  those  criteria  should  not  unfairly  disadvantage  certain 
economic  activities  over  others  if  the  former  contribute  towards  the  environmental 
objectives to the same extent as the latter.  

(28)  When  establishing  technical  screening  criteria,  the  Commission  should  assess  whether 
adoption  of  those  criteria  for  environmentally  sustainable  activities  would  give  rise  to 
stranded  assets  or  deliver  inconsistent  incentives,  and  whether  it  would  have  any  negative 
impact on liquidity in financial markets.  

(29)  To  avoid  overly  burdensome  compliance  costs  on  economic  operators,  the  Commission 
should  establish  technical  screening  criteria  that  provide  for  sufficient  legal  clarity,  are 
practicable, easy to apply and with which compliance can be verified within reasonable cost-
of-compliance boundaries. 

(30)  To ensure that investments are channelled towards economic activities that make the biggest 
positive impact on the environmental objectives, the Commission should give priority to the 
establishment  of  technical  screening  criteria  for  the  economic  activities  that  potentially 
contribute most to the environmental objectives.  

(31)  Appropriate  technical  screening  criteria  should  be  established  for  the  transport  sector, 
including  for  mobile  assets,  which  should  take  into  account  that  the  transport  sector, 
including international shipping, contributes close to 26% of total greenhouse gas emissions 
in  the  Union.  As  evidenced  in  the  Action  Plan  on  Financing  Sustainable  Growth48  the 
transport sector represents about 30% of additional annual investment needs for sustainable 
development  in  the  Union,  including  by  increasing  electrification  or  transition  to  cleaner 
modes of transport by promoting modal shift and traffic management. 

(32) 

It is  of particular importance that the Commission  when preparing the development  of the 
technical  screening  criteria,  carry  out  appropriate  consultations  in  line  with  Better 
Regulation requirements. The process for the establishment and the update of the technical 
screening  criteria  should  also  involve  relevant  stakeholders  and  build  on  the  advice  of 
experts  with proven knowledge  and experience in the relevant  areas. For that  purpose, the 

43 

44 

45 

46 

47 
48 

Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011 on the assessment 
of the effects of certain public and private projects on the environment (OJ L 26, 28.1.2012, p. 1). 
Directive  2014/23/EU  of  the  European  Parliament  and  of  the  Council  of  26 February  2014  on  the  award  of 
concession contracts (OJ L 94, 28.3.2014, p. 1). 
Directive  2014/24/EU  of  the  European  Parliament  and  of  the  Council  of  26 February  2014  on  public 
procurement and repealing Directive 2004/18/EC (OJ L 94, 28.3.2014, p. 65). 
Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by 
entities  operating  in  the  water,  energy,  transport  and  postal  services  sectors  and  repealing  Directive 
2004/17/EC (OJ L 94, 28.3.2014, p. 243). 
https://www.unpri.org/download?ac=1534. 
COM(2018) 97 final. 

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(33) 

Commission  should  set  up  a  Platform  on  sustainable  finance.  This  Platform  should  be 
composed  of  experts  representing  both  the  public  and  the  private  sector.  Public  sector 
representatives  should  include  experts  from  the  European  Environmental  Agency,  the 
European Supervisory Authorities and the European Investment Bank. Private sector experts 
should  include  representatives  of  relevant  stakeholders,  including  financial  market  actors, 
universities, research institutes, associations and organisations. The Platform should advise 
the  Commission  on  the  development,  analysis  and  review  of  technical  screening  criteria, 
including  their  potential  impact  on  the  valuation  of  assets  that  until  the  adoption  of  the 
technical screening criteria were considered as green assets under existing market practices. 
The Platform should also advise the Commission on whether the technical screening criteria 
are  suitable  for  further  uses  in  future  Union  policy  initiatives  aimed  at  facilitating 
sustainable investment.  

In order to specify the requirements set out in this Regulation, and particularly to establish 
and  update  granular  and  calibrated  technical  screening  criteria  for  different  economic 
activities  as  to  what  constitutes  a  substantial  contribution  and  significant  harm  to  the 
environmental  objectives,  the  power  to  adopt  acts  in  accordance  with  Article  290  of  the 
Treaty on the Functioning of the European Union should be delegated to the Commission in 
respect  of  the  information  required  to  comply  with  the  disclosure  obligation  set  out  in 
Article  4  (3),  and  the  technical  screening  criteria  mentioned  in  Article  6(2),  Article  7(2), 
Article 8(2), Article 9(2), Article 10(2) and Article 11(2). It is of particular importance that 
the Commission carry out appropriate consultations during its preparatory work, including at 
expert level, and that those consultations be conducted in accordance with the principles laid 
down  in  the  Interinstitutional  Agreement  on  Better  Law-Making  of  13 April  2016.  In 
particular,  to  ensure  equal  participation  in  the  preparation  of  delegated  acts,  the  European 
Parliament  and  the  Council  should  receive  all  documents  at  the  same  time  as  Member 
States’  experts,  and  the  experts  of  the  European  Parliament  and  the  Council  should 
systematically  have  access  to  meetings  of  Commission  expert  groups  dealing  with  the 
preparation of delegated acts. 

(34)  To give sufficient time to the relevant actors to familiarise themselves with the criteria for 
environmentally sustainable economic activities set out in this Regulation and to prepare for 
their  application,  the  obligations  set  out  in  this  Regulation  should  become  applicable,  for 
each environmental objective, six months after the relevant technical screening criteria have 
been adopted. 

(35)  The  application  of  this  Regulation  should  be  reviewed  regularly  in  order  to  assess  the 
progress on the development of technical screening criteria for environmentally sustainable 
activities, the use of the definition of environmentally sustainable investment, and whether 
compliance with the obligations requires the establishment of a verification mechanism. The 
review should include also an assessment of whether the scope of this Regulation should be 
extended to cover social sustainability objectives.  

(36)  Since  the  objectives  of  this  Regulation  cannot  be  sufficiently  achieved  by  the  Member 
States, but can be better achieved at Union level, by reason of the need to introduce at Union 
level  uniform  criteria  for  environmentally  sustainable  economic  activities,  the  Union  may 
adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the 
Treaty on European Union. In accordance with the principle of proportionality, as set out in 
that Article, this Regulation does not go beyond what is necessary in order to achieve those 
objectives, 

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HAVE ADOPTED THIS REGULATION: 

Chapter I 

Subject matter, scope and definitions 

Article 1 
Subject matter and scope 

1. 

This  Regulation  establishes  the  criteria  for  determining  whether  an  economic  activity  is 
environmentally  sustainable  for  the  purposes  of  establishing  the  degree  of  environmental 
sustainability of an investment. 

2. 

This Regulation applies to the following:  

(a)  measures adopted by Member States or by the Union setting out any requirements on 
market actors in respect of financial products or corporate bonds that are marketed as 
environmentally sustainable. 

(b) 

financial  market  participants  offering  financial  products  as  environmentally 
sustainable investments or as investments having similar characteristics. 

Article 2 
Definitions  

For the purposes of this Regulation, the following definitions shall apply: 

‘environmentally  sustainable  investment’  means  an  investment  that  funds  one  or  several 
economic activities that qualify under this Regulation as environmentally sustainable;  

‘financial  market  participants’  mean  financial  market  participants  as  defined  in  Article  2 
(a)  of  [Commission  proposal  for  a  Regulation  on  disclosures  relating  to  sustainable 
investments and sustainability risks and amending Directive (EU) 2016/2341]; 

'financial  products'  mean  financial  products  as  defined  in  Article  2  (j)  of  [Commission 
proposal  for  a  Regulation  on  disclosures  relating  to  sustainable  investments  and 
sustainability risks and amending Directive (EU) 2016/2341];  

'climate change mitigation' means the process of holding the increase in the global average 
temperature  to  well  below  2  °C  above  pre-industrial  levels  and  limiting  the  temperature 
increase to 1.5 °C above pre-industrial levels; 

‘climate  change  adaptation’  means  the  process  of  adjustment  to  actual  and  expected 
climate and its effects; 

'greenhouse  gas'  means  a  greenhouse  gas  listed  in  Annex  I  to  Regulation  (EU)  No 
525/2013 of the European Parliament and of the Council;49  

'circular economy' means maintaining the value of products, materials and resources in the 
economy for as long as possible, and minimising waste, including through the application 
of the waste hierarchy as laid down in Article 4 of Directive 2008/98/EC of the European 
Parliament and of the Council;50 

Regulation (EU) No 525/2013 of the European Parliament and of the Council on a mechanism for monitoring 
and  reporting  greenhouse  gas  emissions  and  for  reporting  other  information  at  national  and  Union  level 
relevant to climate change and repealing Decision 280/2004/EC (OJ L 165, 18.6.2013, p. 13). 
Directive  2008/98/EC  of  the  European  Parliament  and  of  the  Council  of  19  November  2008  on  waste  and 
repealing certain Directives (OJ L 312, 22.11.2008, p. 3). 

1. 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

49 

50 

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(h) 

'pollution' means: 

(i) 

the direct or indirect introduction, as a result of human activity, of substances, 
vibrations, heat, noise or other pollutants into air, water or land which may be 
harmful  to  human  health  or  the  quality  of  the  environment,  may  result  in 
damage  to  material  property,  or  may  impair  or  interfere  with  amenities  and 
other legitimate uses of the environment; 

(ii) 

in  the  context  of  marine  environment,  pollution  as  defined  in  Article  3(8)  of 
Directive 2008/56/EC of the European Parliament and of the Council;51 

(i) 

(j) 

(k) 

(l) 

(m) 

(n) 

'healthy ecosystem' means an ecosystem that is in a good physical, chemical and biological 
condition or of a good physical, chemical and biological quality;  

'energy efficiency' means using energy more efficiently at all the stages of the energy chain 
from production to final consumption; 

‘good environmental status’ means good environmental status as defined in Article 3(5) of 
Directive 2008/56/EC; 

‘marine waters’ means marine waters as defined in Article 3(1) of Directive 2008/56/EC;  

‘surface water’, ‘inland water’, ‘transitional waters’ and ‘coastal water’ shall have the same 
meaning as in points (1), (3), (6) and (7) of Article 2 of Directive 2000/60/EC52; 

'sustainable forest management' means using forests and forest land in a way, and at a rate, 
that  maintains  their  biodiversity,  productivity,  regeneration  capacity,  vitality  and  their 
potential  to  fulfil,  now  and  in  the  future,  relevant  ecological,  economic  and  social 
functions,  at  local,  national,  and  global  levels,  and  that  does  not  cause  damage  to  other 
ecosystems. 

Chapter II 

Environmentally sustainable economic activities 

Article 3 
Criteria for environmentally sustainable economic activities 

For  the  purposes  of  establishing  the  degree  of  environmental  sustainability  of  an  investment,  an 
economic activity shall be environmentally sustainable where that activity complies with all of the 
following criteria: 

(a) 

(b) 

(c) 

(d) 

the economic activity contributes substantially to one or more of the environmental 
objectives set out in Article 5 in accordance with Articles 6 to 11; 

the  economic  activity  does  not  significantly  harm  any  of  the  environmental 
objectives set out in Article 5 in accordance with Article 12; 

the economic activity is carried out in compliance with the minimum safeguards laid 
down in Article 13; 

the  economic  activity  complies  with  technical  screening  criteria,  where  the 
Commission  has  specified  those  in  accordance  with  Articles  6(2),  7(2),  8(2),  9(2), 
10(2) and 11(2).  

51 

52 

Directive  2008/56/EC  of  the  European  Parliament  and  of  the  Council  of  17  June  2008  establishing  a 
framework  for  community  action  in  the  field  of  marine  environmental  policy  (Marine  Strategy  Framework 
Directive) (OJ L 164, 25.6.2008, p. 19–40). 
Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a framework 
for Community action in the field of water policy (OJ L 327, 22.12.2000, p.1). 

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1. 

2. 

3. 

4. 

Article 4 
Use of the criteria for environmentally sustainable economic activities 

Member  States  shall  apply  the  criteria  for  determining  environmentally  sustainable 
economic  activities  set  out  in  Article  3  for  the  purposes  of  any  measures  setting  out 
requirements on market actors in respect of financial products or corporate bonds that are 
marketed as ‘environmentally sustainable’.  

Financial  market  participants  offering  financial  products  as  environmentally  sustainable 
investments, or as investments having similar characteristics, shall disclose information on 
how and to what extent the criteria for environmentally sustainable economic activities set 
out in Article 3 are used to determine the environmental sustainability of the investment. 
Where  financial  market  participants  consider  that  an  economic  activity  which  does  not 
comply with the technical screening criteria set out in accordance with this Regulation or 
for  which  those  technical  screening  criteria  have  not  been  established  yet,  should  be 
considered environmentally sustainable, they may inform the Commission.  

The  Commission  shall  adopt  delegated  acts  in  accordance  with  Article  16  to  supplement 
paragraph 2 to specify the information required to comply with that paragraph, taking into 
account  the  technical  screening  criteria  set  out  in  accordance  with  this  Regulation.  That 
information shall enable investors to identify: 

(a) 

(b) 

the  percentage  of  holdings  pertaining  to  companies  carrying  out  environmentally 
sustainable economic activities;  

the share of the investment funding environmentally sustainable economic activities 
as a percentage of all economic activities.  

The  Commission  shall  adopt  the  delegated  act  in  accordance  with  paragraph  3  by  31 
December  2019  with  a  view  to  ensure  its  entry  into  application  on  1  July  2020.  The 
Commission may amend that delegated act, in particular in the light of amendments to the 
delegated acts adopted in accordance with Article 6(2), Article 7(2), Article 8(2), Article 
9(2), Article 10(2) and Article 11(2). 

For the purposes of this Regulation, the following shall be environmental objectives: 

Article 5 
Environmental objectives 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

1. 

climate change mitigation; 

climate change adaptation; 

sustainable use and protection of water and marine resources; 

transition to a circular economy, waste prevention and recycling; 

pollution prevention and control; 

protection of healthy ecosystems. 

Article 6 
Substantial contribution to climate change mitigation 

An  economic  activity  shall  be  considered  to  contribute  substantially  to  climate  change 
mitigation  where  that  activity  substantially  contributes  to  the  stabilization  of  greenhouse 
gas  concentrations  in  the  atmosphere  at  a  level  which  prevents  dangerous  anthropogenic 
interference with the climate system by avoiding or reducing greenhouse gas emissions or 
enhancing greenhouse gas removals through any of the following means, including through 
process or product innovation: 

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(a)  generating,  storing  or  using  renewable  energy  or  climate-neutral  energy  (including 
carbon-neutral  energy),  including  through  using  innovative  technology  with  a 
potential  for  significant  future  savings  or  through  necessary  reinforcement  of  the 
grid; 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

improving energy efficiency; 

increasing clean or climate-neutral mobility; 

switching to use of renewable materials; 

increasing carbon capture and storage use; 

phasing  out  anthropogenic  emissions  of  greenhouse  gases,  including  from  fossil 
fuels; 

establishing  energy  infrastructure  required  for  enabling  decarbonisation  of  energy 
systems; 

(h)  producing clean and efficient fuels from renewable or carbon-neutral sources. 

2. 

The Commission shall adopt delegated acts in accordance with Article 16 to: 

3. 

4. 

1. 

(a) 

(b) 

 supplement  paragraph  1  to  establish  technical  screening  criteria  for  determining 
under which conditions a specific economic activity is considered, for the purposes 
of this Regulation, to contribute substantially to climate change mitigation; 

 supplement  Article  12  to  establish  technical  screening  criteria,  for  each  relevant 
environmental objective, for determining whether an economic activity in respect of 
which  screening  criteria  are  established  pursuant  to  point  (a)  of  this  paragraph  is 
considered, for the purposes of this Regulation, to cause significant harm to one or 
more of those objectives.  

The Commission shall establish the technical screening criteria referred to in paragraph 2 
in one delegated act, taking into account the requirements laid down in Article 14.  

The Commission shall adopt the delegated act referred to in paragraph 2 by 31 December 
2019, with a view to ensure its entry into application on 1 July 2020.  

Article 7 
Substantial contribution to climate change adaptation 

An  economic  activity  shall  be  considered  to  contribute  substantially  to  climate  change 
adaptation where that activity contributes substantially to reducing the negative effects of 
the  current  and  expected  future  climate  or  preventing  an  increase  or  shifting  of  negative 
effects of climate change, through the following means: 

(a)  preventing or reducing the location- and context-specific negative effects of climate 
change,  which  shall  be  assessed and  prioritised  using  available  climate  projections, 
on the economic activity; 

(b)  preventing  or  reducing  the  negative  effects  that  climate  change  may  pose  to  the 
natural and built environment within which the economic activity takes place, which 
shall be assessed and prioritised using available climate projections. 

2. 

The Commission shall adopt a delegated act in accordance with Article 16 to: 

(a) 

supplement  paragraph  1  to  establish  technical  screening  criteria  for  determining 
under which conditions a specific economic activity is considered, for the purposes 
of this Regulation, to contribute substantially to climate change adaptation; 

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3. 

4. 

1. 

(b) 

supplement  Article  12  to  establish  technical  screening  criteria,  for  each  relevant 
environmental objective, for determining whether an economic activity in respect of 
which  screening  criteria  are  established  pursuant  to  point  (a)  of  this  paragraph  is 
considered, for the purposes of this Regulation, to cause significant harm to one or 
more of those objectives.  

The Commission shall establish the technical screening criteria referred to in paragraph 2 
together in one delegated act, taking into account the requirements laid down in Article 14. 

The Commission shall adopt the delegated act referred to in paragraph 2 by 31 December 
2019, with a view to ensure its entry into application on 1 July 2020.  

Article 8 
Substantial contribution to sustainable use and protection of water and marine resources 

An economic activity shall be considered to be contributing substantially to sustainable use 
and protection of water and marine resources where that activity substantially contributes 
to the good status of waters, including freshwater, transitional waters and coastal waters, or 
to the good environmental status of marine waters, through any of the following means: 

(a)  protecting the  aquatic environment from the adverse effects  of urban and industrial 
waste water discharges by ensuring adequate collection and treatment of urban and 
industrial  waste  waters  in  accordance  with  Articles  3,  4,  5  and  11  of  Council 
Directive 91/271/EEC53; 

(b)  protecting  human  health  from  the  adverse  effects  of  any  contamination  of  drinking 
water  by  ensuring  that  it  is  free  from  any  micro-organisms,  parasites  and  a 
substances  that  constitute  a  potential  danger  to  human  health,  and  that  it  meets  the 
minimum  requirements  set  out  in  Annex  I,  Parts  A  and  B,  to  Council  Directive 
98/83/EC54, and increasing citizens' access to clean drinking water; 

(c) 

(d) 

(e) 

abstracting water in keeping with the objective of good quantitative status as defined 
in table 2.1.2 in Annex V to Directive 2000/60/EC; 

improving  water  efficiency,  facilitating  water  reuse,  or  any  other  activity  that 
protects  or  improves  quality  of  Union’s  water  bodies  in  accordance  with  Directive 
2000/60/EC; 

ensuring  the  sustainable  use  of  marine  ecosystem  services  or  contributing  to  good 
environmental status of marine waters, as determined on the basis of the qualitative 
descriptors  set  out  in  Annex  I  to  Directive  2008/56/EC  and  as  further  specified  in 
Commission Decision (EU) 2017/84855. 

2. 

The Commission shall adopt a delegated act in accordance with Article 16 to: 

(a) 

supplement  paragraph  1  to  establish  technical  screening  criteria  for  determining 
under which conditions a specific economic activity is considered, for the purposes 
of  this  Regulation,  to  contribute  substantially  to  sustainable  use  and  protection  of 
water and marine resources; 

53 

54 

55 

Council Directive 91/271/EEC of 21 May 1991 concerning urban waste water treatment (OJ L 135, 30.5.1991, 
p. 40). 
Council Directive 98/83/EC of 3 November 1998 on the quality of water intended for human consumption (OJ 
L 330, 5.12.1998, p. 32).  
Commission Decision (EU) 2017/848 of 17 May 2017 laying down criteria and methodological standards on 
good environmental status of marine waters and specifications and standardised methods for monitoring and 
assessment, and repealing Decision 2010/477/EU (OJ L 125, 18.5.2017, p. 43). 

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3. 

4. 

1. 

(b) 

supplement  Article  12  to  establish  technical  screening  criteria,  for  each  relevant 
environmental objective, for determining whether an economic activity in respect of 
which  screening  criteria  are  established  pursuant  to  point  (a)  of  this  paragraph  is 
considered, for the purposes of this Regulation, to cause significant harm to one or 
more of those objectives.  

The Commission shall establish the technical screening criteria referred to in paragraph 2 
together  in  one  delegated,  and  taking  into  account  the  requirements  laid  down  in  Article 
14. 

The Commission shall adopt the delegated act referred to in paragraph 2 by 1 July 2022, 
with a view to ensure its entry into application on 31 December 2022.  

Article 9 
Substantial contribution to the circular economy and waste prevention and recycling 

An economic activity shall be considered to contribute substantially to the transition to a 
circular  economy  and  waste  prevention  and  recycling  where  that  activity  contributes 
substantially to that environmental objective through any of the following means: 

(a) 

(b) 

(c) 

improving  the  efficient  use  of  raw  materials  in  production,  including  through 
reducing the use of primary raw materials and increasing the use of by-products and 
waste; 

increasing the durability, reparability, upgradability or reusability of products; 

increasing  the  recyclability  of  products, including  of  individual  materials  contained 
in products, inter alia through substitution or reduced use of products and materials 
that are not recyclable; 

(d) 

reducing the content of hazardous substances in materials and products; 

(e)  prolonging the use of products including through increasing reuse, remanufacturing, 

upgrading, repair and sharing of products by consumers; 

(f) 

(g) 

(h) 

(i) 

(j) 

increasing  the  use  of  secondary  raw  materials  and  their  quality,  including  through 
high-quality recycling of waste; 

reducing waste generation; 

increasing preparing for re-use and recycling of waste; 

avoiding incineration and disposal of waste; 

avoiding  and  cleaning-up  of  litter  and  other  pollution  caused  by  improper  waste 
management; 

(k)  using natural energy resources efficiently. 

2. 

The Commission shall adopt a delegated act in accordance with Article 16 to: 

(a) 

(b) 

supplement  paragraph  1  to  establish  technical  screening  criteria  for  determining 
under which conditions a specific economic activity is considered, for the purposes 
of  this  Regulation,  to  contribute  substantially  to  the  circular  economy  and  waste 
prevention and recycling; 

supplement  Article  12  to  establish  technical  screening  criteria,  for  each  relevant 
environmental objective, for determining whether an economic activity in respect of 
which  screening  criteria  are  established  pursuant  to  point  (a)  of  this  paragraph  is 
considered, for the purposes of this Regulation, to cause significant harm to one or 
more of those objectives.  

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3. 

4. 

1. 

The Commission shall establish the technical screening criteria referred to in paragraph 2 
together in one delegated act, taking into account the requirements laid down in Article 14. 

The Commission shall adopt the delegated act referred to in paragraph 2 by 1 July 2021, 
with a view to ensure its entry into application on 31 December 2021.  

Article 10 
Substantial contribution to pollution prevention and control 

An economic activity shall be considered to contribute substantially to pollution prevention 
and control where that activity contributes to a high level of environmental protection from 
pollution through any of the following means: 

(a) 

(b) 

reducing air, water and soil pollutant emissions other than greenhouse gasses; 

improving  levels  of  air,  water  or  soil  quality  in  the  areas  in  which  the  economic 
activity  takes  place  whilst  minimizing  negative  impacts  on,  and  risks  to,  human 
health and the environment; 

(c)  minimising significant adverse effects  on human health and the environment of the 

production and use of chemicals. 

2. 

The Commission shall adopt a delegated act in accordance with Article 16 to: 

3. 

4. 

1. 

(a) 

(b) 

supplement  paragraph  1  to  establish  technical  screening  criteria  for  determining 
under which conditions a specific economic activity is considered, for the purposes 
of this Regulation, to contribute substantially to pollution prevention and control; 

supplement  Article  12  to  establish  technical  screening  criteria,  for  each  relevant 
environmental objective, for determining whether an economic activity in respect of 
which  screening  criteria  are  established  pursuant  to  point  (a)  of  this  paragraph  is 
considered, for the purposes of this Regulation, to cause significant harm to one or 
more of those objectives.  

The Commission shall establish the technical screening criteria referred to in paragraph 2 
together in one delegated act, taking into account the requirements laid down in Article 14. 

The Commission shall adopt the delegated act referred to in paragraph 2 by 1 July 2021, 
with a view to ensure its entry into application on 31 December 2021. 

Article 11 
Substantial contribution to protection of healthy ecosystems 

For the purposes of this Regulation, an economic activity shall be considered to contribute 
substantially  to  healthy  ecosystems  where  that  activity  contributes  substantially  to 
protecting, conserving and enhancing biodiversity and ecosystem services in line with the 
relevant  legislative  and  non-legislative  Union  instruments,  through  any  of  the  following 
means: 

(a)  nature  conservation  (habitats,  species);  protecting,  restoring  and  enhancing  the 

condition of ecosystems and their capacity to provide services; 

(b) 

(c) 

sustainable land management, including adequate protection of soil biodiversity; land 
degradation neutrality; and the remediation of contaminated sites; 

sustainable  agricultural  practices,  including  those  that  contribute  to  halting  or 
preventing deforestation and habitat loss; 

(d) 

sustainable forest management. 

2. 

The Commission shall adopt a delegated act in accordance with Article 16 to: 

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(a) 

(b) 

supplement  paragraph  1  to  establish  technical  screening  criteria  for  determining 
under which conditions a specific economic activity is considered, for the purposes 
of this Regulation, to contribute substantially to the protection of healthy ecosystems; 

supplement  Article  12  to  establish  technical  screening  criteria,  for  each  relevant 
environmental objective, for determining whether an economic activity in respect of 
which  screening  criteria  are  established  pursuant  to  point  (a)  of  this  paragraph  is 
considered, for the purposes of this Regulation, to cause significant harm to one or 
more of those objectives.  

3. 

4. 

The Commission shall establish the technical screening criteria referred to in paragraph 2 
together in one delegated act, taking into account the requirements laid down in Article 14. 

The Commission shall adopt the delegated act referred to in paragraph 2 by 1 July 2022, 
with a view to ensure its entry into application on 31 December 2022. 

Article 12 
Significant harm to environmental objectives 

For the purposes of Article 3(b), an economic activity shall be considered as significantly harming: 

(a) 

(b) 

(c) 

(d) 

climate  change  mitigation,  where  that  activity  leads  to  significant  greenhouse  gas 
emissions; 

climate  change  adaptation,  where  that  activity  leads  to  increased  negative  effect  of 
current  and  expected  climate,  for  and  beyond  the  natural  and  built  environment 
within which that activity takes place; 

sustainable use and protection of water and marine resources, where that activity is 
detrimental  to  a  significant  extent  to  good  status  of  Union  waters,  including 
freshwater, transitional waters and coastal waters, or to good environmental status of 
marine waters of the Union; 

circular  economy  and  waste  prevention  and  recycling,  where  that  activity  leads  to 
significant  inefficiencies  in  the  use  of  materials  in  one  or  more  stages  of  the  life-
cycle  of  products,  including  in  terms  of  durability,  reparability,  upgradability, 
reusability  or  recyclability  of  products;  or  where  that  activity  leads  to  a  significant 
increase in the generation, incineration or disposal of waste; 

(e)  pollution  prevention  and  control  where  that  activity  leads  to  significant  increase  in 
emissions of pollutants to air, water and land, as compared to the situation before this 
activity started; 

(f) 

healthy  ecosystems,  where  that  activity  is  detrimental  to  a  significant  extent  to  the 
good condition of ecosystems. 

Article 13 
Minimum safeguards 

The  minimum  safeguards  referred  to  in  Article 3(c)  shall  be  procedures  implemented  by  the 
undertaking that is carrying out an economic activity to ensure that the principles and rights set out 
in  the  eight  fundamental  conventions  identified  in  the  International  Labour  Organisation’s 
declaration on Fundamental Rights and Principles at Work, namely: the right not to be subjected to 
forced  labour,  the  freedom  of  association,  workers'  right  to  organise,  the  right  to  collective 
bargaining,  equal  remuneration  for  men  and  women  workers  for  work  of  equal  value,  non-
discrimination in opportunity and treatment with respect to employment and occupation, as well as 
the right not to be subjected to child labour, are observed.  

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Article 14 
Requirements for technical screening criteria  

1. 

The technical screening criteria adopted in accordance with Articles 6(2), 7(2), 8(2), 9(2), 
10(2) and 11(2) shall: 

(a) 

identify  the  most  relevant  potential  contributions  to  the  given  environmental 
objective, considering not only the short-term but also the longer term impacts of a 
specific economic activity; 

(b) 

specify the minimum requirements that need to be met to avoid significant harm to 
any of the relevant environmental objectives; 

(c)  be qualitative or quantitative, or both, and contain thresholds where possible; 

(d)  where  appropriate,  build  upon  Union  labelling  and  certification  schemes,  Union 
methodologies  for  assessing  environmental  footprint,  and  Union  statistical 
classification systems, and take into account any relevant existing Union legislation; 

(e)  be based on conclusive scientific evidence and take into account, where relevant, the 

precautionary principle enshrined in article 191 TFEU; 

(f) 

(g) 

(h) 

(i) 

(j) 

take into account the environmental impacts of the economic activity itself, as well 
as  of  the  products  and  services  provided  by  that  economic  activity,  notably  by 
considering their production, use and end-of-life; 

take into account the nature and the scale of the economic activity; 

take into account the potential impact on liquidity in the market, the risk of certain 
assets becoming stranded as a result of losing value due to the transition to a more 
sustainable economy, as well as the risk of creating inconsistent incentives;  

cover all relevant economic activities within a specific sector and ensure that those 
activities  are  treated  equally  if  they  contribute  equally  towards  one  or  more 
environmental objectives, to avoid distorting competition in the market; 

be  set  as  to  facilitate  the  verification  of  compliance  with  those  criteria  whenever 
possible. 

The  technical  screening  criteria  referred  to  in  paragraph  1  shall  also  include  criteria  for 
activities  related  to  the  clean  energy  transition,  in  particular  energy  efficiency  and 
renewable  energy,  to  the  extent  that  those  are  substantially  contributing  to  any  of  the 
environmental objectives.  

The  technical  screening  criteria  referred  to  in  paragraph  1  shall  also  include  criteria  for 
activities  related  to  the  switch  to  clean  or  climate-neutral  mobility,  including  through 
modal  shift,  efficiency  measures  and  alternative  fuels,  to  the  extent  that  those  are 
substantially contributing to any of the environmental objectives. 

The  Commission  shall  regularly  review  the  screening  criteria  referred  to  in  paragraph  1 
and, if appropriate, amend the delegated acts adopted in accordance with this Regulation in 
line with scientific and technological developments. 

2. 

3. 

4. 

Article 15 
Platform on Sustainable Finance 

1. 

The Commission shall establish a Platform on sustainable finance composed of: 

(a) 

representatives of: 

(i) 

the European Environment Agency; 

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(ii) 

the European Supervisory Authorities; 

(iii) 

the European Investment Bank and the European Investment Fund; 

experts representing relevant private stakeholders; 

experts appointed in a personal capacity, with proven knowledge and experience in 
the areas covered by this Regulation.  

(b) 

(c) 

2. 

The Platform on Sustainable Finance shall: 

(a) 

(b) 

(c) 

(d) 

advise  the  Commission  on  the  technical  screening  criteria  referred  to  in  Article 14, 
and the possible need to update those criteria; 

analyse the impact of the technical screening criteria in terms of potential costs and 
benefits of their application; 

assist  the  Commission  to  analyse  requests  from  stakeholders  to  develop  or  revise 
technical screening criteria for a given economic activity;  

advise  the  Commission  on  the  suitability  of  the  technical  screening  criteria  for 
possible further uses;  

(e)  monitor and report regularly to the Commission on capital flows towards sustainable 

investment; 

(f) 

advise the Commission on the possible need to amend this Regulation. 

3. 

The Platform on Sustainable Finance shall be chaired by the Commission. 

Article 16 
Exercise of the delegation  

1. 

2. 

3. 

4. 

5. 

6. 

The  power  to  adopt  delegated  acts  is  conferred  on  the  Commission,  subject  to  the 
conditions laid down in this Article. 

The power to adopt delegated acts referred to in Articles 4(3), 6(2), 7(2), 8(2), 9(2), 10(2) 
and 11(2) shall be conferred on the Commission for an indeterminate period from [Date of 
entry into force of this Regulation]. 

The  delegation  of  powers  referred  to  in  paragraph  2  may  be  revoked  at  any  time  by  the 
European  Parliament  or  by  the  Council.  A  decision  to  revoke  shall  put  an  end  to  the 
delegation of the power specified in that decision. It shall take effect the day following the 
publication of the decision in the Official Journal of the European Union or at a later date 
specified therein. It shall not affect the validity of any delegated acts already in force. 

Before adopting a delegated act, the Commission shall consult experts designated by each 
Member  State  in  accordance  with  the  principles  laid  down  in  the  Interinstitutional 
Agreement of 13 April 2016 on Better Law-Making. 

As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the 
European Parliament and to the Council. 

A  delegated  act  adopted  pursuant  to  Articles  4(3),  6(2),  7(2),  8(2),  9(2),  10(2)  and  11(2) 
shall  enter  into  force  only  if  no  objection  has  been  expressed  either  by  the  European 
Parliament or the Council within a period of two months of notification of that act to the 
European Parliament and the Council or if, before the expiry of that period, the European 
Parliament and the Council have both informed the Commission that they will not object. 
That period shall be extended by two months at the initiative of the European Parliament or 
of the Council. 

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Chapter III 

Final provisions 

Article 17 
Review clause 

1. 

By  31  December  2021,  and  subsequently  every  three  years  thereafter,  the  Commission 
shall publish a report on the application of this Regulation. That report shall evaluate the 
following: 

(a) 

(b) 

(c) 

(d) 

the  progress  on  the  implementation  of  this  Regulation  with  regard  to  the 
development  of 
technical  screening  criteria  for  environmentally  sustainable 
economic activities; 

the possible need to  revise the criteria set out in this Regulation  for considering an 
economic activity environmentally sustainable;  

the  appropriateness  of  extending  the  scope  of  this  Regulation  to  cover  other 
sustainability objectives, in particular social objectives; 

the use of the definition of environmentally sustainable investment in Union law, and 
at  Member  State  level,  including  the  appropriateness  of  setting  up  verification 
mechanism of compliance with the criteria set out in this Regulation. 

The report shall be sent to the European Parliament and to the Council. The Commission 
shall make accompanying proposals where appropriate.  

Article 18 
Entry into force and application 

This Regulation shall enter into force on the twentieth day following that of its publication 
in the Official Journal of the European Union. 

Articles 3 to 13 of this Regulation shall apply: 

(a) 

(b) 

(c) 

in respect of the environmental objectives referred to in points (1) and (2) of Article 
5, from 1 July 2020;  

in respect of the environmental objectives referred to in points (4) and (5) of Article 
5, from 31 December 2021; 

in respect of the environmental objectives referred to in points (3) and (6) of Article 
5, from 31 December 2022. 

2. 

1. 

2. 

This Regulation shall be binding in its entirety and directly applicable in all Member States.  

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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LEGISLATIVE FINANCIAL STATEMENT  

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1.  Title of the proposal/initiative  

1.2.  Policy area(s) concerned 

1.3.  Nature of the proposal/initiative  

1.4.  Objective(s)  

1.5.  Grounds for the proposal/initiative  

1.6.  Duration and financial impact  

1.7.  Management mode(s) planned  

2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

2.2.  Management and control system  

2.3.  Measures to prevent fraud and irregularities  

3. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

3.1.  Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget  line(s) 
affected  

3.2.  Estimated impact on expenditure  

3.2.1. Summary of estimated impact on expenditure  

3.2.2. Estimated impact on [body]'s appropriations  

3.2.3. Estimated impact on [body]'s human resources 

3.2.4. Compatibility with the current multiannual financial framework 

3.2.5. Third-party contributions  

3.3.  Estimated impact on revenue 

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1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  the 
establishment of a framework to facilitate sustainable investment 

1.2. 

Policy area(s) concerned 

Policy area: Financial Stability, Financial Services and Capital Markets Union 

Activity: Sustainable Finance 

1.3. 

Nature of the proposal/initiative  

 The proposal/initiative relates to a new action  

 The proposal/initiative relates to a new action following a pilot project/preparatory 
action56  

 The proposal/initiative relates to the extension of an existing action  

 The proposal/initiative relates to an action redirected towards a new action  

1.4. 

Objective(s) 

1.4.1.  The Commission's multiannual strategic objective(s) targeted by the proposal/initiative  

Contribute  to  a  better  integrated  and  innovative  internal  market  for  sustainable  financial 
services while ensuring a high level of consumer/investor protection and financial stability. 

1.4.2. 

Specific objective(s)  

In 2015, landmark international agreements have been established with the adoption of the 
Sustainable Development Goals (SDG) and the Paris Climate Agreement (COP21). These 
commitments and the growing awareness of the urgency to address climate change, other 
environmental  degradation  and  sustainability  risks  call  for  an  effective  EU  strategy  on 
sustainable finance. 

The  Commission's  Communication  on  accelerating  implementation  of  the  Capital  Markets 
Union (CMU) of September 2016 announced the creation of a High Level Expert Group on 
sustainable finance to set an overarching EU strategy in this area. Capital markets and private 
sources  will  play  an  essential  role  in  mobilising  investment  in  sustainable  technologies, 
applications  and  infrastructure,  and  in  helping  the  European  Union  meet  its  climate  and 
environmental objectives.  

In December 2016, the Commission established a High Level Expert Group on Sustainable 
Finance  that  was  composed  of  twenty  highly  qualified  senior  experts  coming  from  civil 
society,  the  business  community  and  other  non-public  sector  institutions.  In  January  2018, 
the  group  submitted  to  the  Commission  a  set  of  policy  recommendations  aimed  at  (a) 
facilitating  the  flow  of  public  and  private  capital  towards  sustainable  investments,  and  (b) 
minimising possible risks to the EU financial system due to its exposure to carbon intensive 
assets.  A  particular  focus  was  on  environmental  sustainability,  but  other  dimensions  of 
sustainability, such as social and governmental risks, were also considered where relevant.  

In  CMU  Mid-Term  Review  (MTR)  Communication  of  June  2017,  the  Commission 
undertook  to  "decide  by  Q1  2018  on  the  concrete  follow-up  that  it  will  give  to  the 
recommendations  of  the High  Level Expert Group on Sustainable Finance".  To this  end, 

56 

As referred to in Article 54(2)(a) or (b) of the Financial Regulation. 

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the  Commission's  Action  Plan  frames  the  objectives  of  its  policy  in  terms  of  sustainable 
finance,  identifies  the  priorities,  and  sets  out  the  steps  that  it  will  take  and  the  related 
timetable.  

The  Commission's  Action  Plan  on  Financing  Sustainable  Growth  of  8  March  2018  is 
accompanied by the following actions: 

•  Establishing  an  EU  classification  system  for  sustainability  activities  (starting  with 
climate-related activities)  

• Creating standards and labels for green financial products 

• Better integrating sustainability in the investment mandates of institutional investors and 
asset managers 

• Developing sustainability benchmarks 

• Better integrating sustainability in ratings and research 

• Enhancing disclosures 

• Incorporating sustainability in prudential requirements  

•  Fostering  sustainable  corporate  governance  and  attenuate  short-termism  in  capital 
markets 

• Better integrating sustainability in supervisory processes (e.g. ESAs to provide guidance 
on  how  sustainability  can  be  taken  into  account  in  relevant  EU  financial  services 
legislation and help identify existing gaps; promote convergence on the implementation of 
sustainability considerations in EU law; identify and report on the risks that ESG factors 
pose  to  financial  stability  -  e.g.  through  the  development  of  a  common  EU  methodology 
for relevant scenario analyses, which could later evolve into climate/environmental stress 
testing).  

• Creating a public-private platform (public sector bodies such as the ESAs, EEA, EIB and 
Eurostat)  that  would  monitor  key  developments  to  ensure  the  progressive  scale-up  and 
adaptability of the EU sustainability taxonomy. Over time, it may also carry out other tasks 
necessary to achieve the objectives of the Action Plan.  

The  proposal  of  a  Regulation  on  the  establishment  of  a  framework  to  facilitate 
sustainable  investment  focuses  on  the  establishment  of  a  common  language  for 
sustainable finance, e.g. a unified EU classification system (or a so-called taxonomy). The 
taxonomy will be the basis for all the aforementioned actions, and this work will closely 
interact with these activities.  

The  proposed  Platform  on  Sustainable  Finance  will  i)  update  and  continue  to 
progressively scale up the EU sustainability taxonomy; ii) carry out other tasks necessary 
to achieve the objectives of the sustainable finance action plan; and iii) monitor and report 
regularly on capital flows towards sustainable investment The key players of this work are 
the following: 

• European Supervisory Authorities (ESAs): the ESAs will be involved in all of the above 
targeted actions that are consistent with their current mandates, as well as with the revised 
ones as proposed in the ESAs legislative proposal of September 2017 where the mandate 
of  the  ESAs  is  enhanced  to  require  them  to  specifically  integrate  Environmental,  Social 
and Governance (ESG) risks into their work. Note: for this enhanced mandate, no request 
for resources was included in the legislative proposal for the ESAs.  

The ESAs will play a key role in the development of EU taxonomies to ensure that they are 
usable  by  financial  institutions,  applicable  to  financial  products  and  compatible  with  the 
EU  financial  legislation,  including  prudential  regulation.  For  example,  EBA  and  EIOPA 

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37 

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will  ensure  that  EU  taxonomies  can  allow  the  analysis  of  risk  differences  between  bank 
and  insurance  assets/exposures  and  will  analyse  such  differences  and  their  possible 
incorporation  into  prudential  regulation.  ESMA  and  EIOPA  will  contribute  to  the 
incorporation  of  EU  taxonomies  into  the  rules  under  which  investment  companies  are 
pension funds are managed. ESMA and EBA in particular will ensure that EU taxonomies 
can feed into the development of green bond standards and other financial products green 
labels  and  contribute  to  the  development  of  such  standards  and  labels.  ESMA  will  also 
ensure that EU taxonomies feed into the construction/analysis of sustainability benchmarks 
and  will  contribute  to  linking  EU  taxonomies  with  suitability  assessments  of  financial 
instruments and with corporate reporting. 

The ESAs, in particular EBA and EIOPA, will have an important role to play in ensuring 
that  taxonomies  are  developed  in  such  a  way  that  they  are  useable  for  climate  scenario 
analysis  and,  at  a  later  stage,  for  climate  stress  testing,  and  will  contribute  to  the 
development  of  methodologies  for such  scenario  analysis  and  stress testing  based  on  EU 
taxonomies.  

The  ESAs,  in  particular  ESMA,  will  contribute  to  the  collection  and  analysis  of  market 
data (including transactional data) for the Sustainable Finance Observatory.  

In order to accomplish the listed tasks, each Authority would need the following new posts 
as of 2020: 1 CA for EBA, 1 CA for EIOPA and 1 TA for ESMA.  

•  European  Environmental  Agency  (EEA):  The  EEA  new  tasks  fall  within  the  current 
mandate  of  the  EEA  Founding  Regulation,  yet  at  the  same  time  these  tasks  will  be 
additional tasks for the EEA and therefore require more resources. 

The EEA will be heavily involved in the sustainable finance work, in particular in the work 
on  EU  classification  system  for  sustainability  activities,  standards  and  labels  for  green 
financial products, and provision of advisory/observatory function. The EEA is scheduled 
to provide its technical knowledge in various environmental areas to develop and maintain 
the  EU  taxonomy  for  all  climate-related  and  environmental  issues.  The  EEA  will  also 
collect and provide data on investment needs and flows in EU Member States as part of the 
Sustainable  Finance  Observatory,  and  provide  advice  to  EU  Member  States  in  order  to 
develop their low-carbon and sustainable investment strategies. The EEA would need the 
following new posts as of 2020: 1 TA and 1 CA posts.  

•  European  Commission:  the  European  Commission  will  be  invovled  in  all  of  the  above 
targeted  actions,  but  in  particular  with  the  management  of  the  aforementioned 
public/private platform (e.g. organisation of meetings for the Platform and any sub-groups, 
reporting  on  the  outcome,  consulting  stakeholders,  preparing  legislative  proposals, 
supproting the observatory/advisory, liasing with the ESAs and the EEA, maintaining the 
IT  collaborative  tool,  reimbursement  of  experts  and  other  secretarial  tasks,  etc.).  The 
European Commission would need the following staff: 10 FTEs (8 AD and 2 AST): 

- FISMA would need 3 FTEs: 1 FTE (AD) for the Platform chair, 2 FTEs (AD) to manage 
the group, and 2 FTE (AST) to provide logistical support. 

- ENV would need 2 FTEs (AD) for the management of this Platform. 

- CLIMA would need 2 FTEs (AD) for the management of this Platform. 

-  ESTAT  would  also  need  1  FTE  (AD)  to  contribute  to  the  taxonomy,  in  particular  the 
monitoring  aspect  of  the  Platform.  This  work  is  complementary  to  the  Sustainable 
Development in the EU: Monitoring report on progress towards SDGs in the EU context 
(2017) and Eurostat Resource efficiency scoreboard. 

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The Platform will customise and use an existing collaborative IT tool of the Commission 
for communication purposes. The annual operational IT costs that will facilitate the work 
of  the  platform  members  will  be  EUR  50  000,  while  the  annual  research/studies/survey 
costs that will support the work of the platform members will be EUR 500 000. Each pillar 
of the Platform is expected to meet 10 times a year and the annual costs of reimbursement 
are estimated at EUR 223 500. 

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1.4.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

The Platform on Sustainable Finance will update and continue to progressively scale up 
the EU sustainability taxonomy; carry out other tasks necessary to achieve the objectives 
of  the  sustainable  finance  action  plan;  and  monitor  and  report  regularly  on  capital  flows 
towards sustainable investment.  

A  clear  and  unified  concept  of  environmental  sustainable  investment  would  provide 
appropriate  signals  to  economic  actors  on  what  activities  are  considered  sustainable; 
protect private investors by avoiding risks of green washing; ensure that the single market 
is not fragmented; and provide the basis for further meaningful action (since there will be 
clarity on what is "sustainable" or "green") in areas such as standards, labels, disclosures, 
and any future changes to prudential rules.  

1.4.4. 

Indicators of results and impact  

Specify the indicators for monitoring implementation of the proposal/initiative. 

The  implementation  of  the  actions  envisaged  in  the  proposal  will  be  monitored  by  the 
Commission. Indicators could include: 

- Number of updates of the taxonomy  

- Number of monitoring reports on capital flows towards sustainable investment 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term  

The proposal for this Regulation follows the adoption of the Commission's Action Plan 
of 8 March 2018 and the HLEG Final Report of January 2018, and identifies a number of 
initiatives  to  enable  the  uptake  of  sustainable  finance  in  the  European  financial  sector. 
While  a  number  of  legislative  initiatives  have  already  been  adopted  in  this  area,  other 
measures  (legislative  and  non-legislative)  are  deemed  necessary  to  ensure  that  the 
European  financial  sector  can  harness  the  benefits  brought  by  sustainable  finance  while 
ensuring adequate level of consumer/investor protection and financial stability. Moreover, 
the  Commission  will  set  up  a  more  stable  governance  structure  in  the  form  of  a  public-
private platform to adapt the EU sustainability taxonomy and monitor key developments. 

1.5.2.  Added value of Union involvement (it may result from different factors, e.g. coordination 
gains, legal certainty, greater effectiveness or complementarities). For the purposes of this 
point  'added  value  of  Union  involvement'  is  the  value  resulting  from  Union  intervention 
which is additional to the value that would have been otherwise created by Member States 
alone. 

Reasons for action at European level (ex-ante): 

A  clear  and  unified  EU  taxonomy  (and  related  concept  of  environmental  sustainable 
investment)  will  provide  appropriate  signals  to  economic  actors  on  what  activities  are 
considered  sustainable;  protect  private  investors  by  avoiding  risks  of  green  washing; 
ensure  that  the  single  market  is  not  fragmented;  and  provide  the  basis  for  further 
meaningful action in areas such as standards, labels, disclosures, and any future changes to 
prudential rules.  

Expected generated Union added value (ex-post): 

The  work  planned  in  this  proposal  will  enable  the  mobilisation  of  sustainable  finance 
across  the  EU  while  ensuring a  high  level  of  financial  stability.  A  unified  taxonomy  and 

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the monitoring of sustainability investments will support the uptake of sustainable finance 
in the European financial sector.  

1.5.3.  Lessons learned from similar experiences in the past 

N/A 

1.5.4.  Compatibility and possible synergy with other appropriate instruments 

The  objective  of  this  proposal  is  consistent  with  a  number  of  other  EU  policies  and 
ongoing  initiatives  that  are  aimed  at:  (i)  developing  the  Economic  and  Monetary  Union 
(EMU); (ii) developing the Capital Markets Union; (iii) integrating sustainability into the 
EU financial system, while at the same time protecting the stability of the financial system 
from risks related to ESG factors. 

First, this proposal is coherent with the EMU. The Five Presidents' Report on Completing 
Europe's  EMU  underlined  that  the  closer  integration  of  capital  markets  and  gradual 
removal  of  remaining  national  barriers  could  create  new  risks  to  financial  stability. 
According  to  this  Report,  there  will  be  a  need  to  expand  and  strengthen  the  supervisory 
framework to ensure the solidity of all financial actors.  

Second,  this  proposal  is  coherent  with  the  CMU  project.  In  the  light  of  increasing 
interconnectedness of financial markets at EU and global level, there is a need to further 
integrate EU supervision to face the future challenges of the EU financial markets. Both the 
UN  2030  Agenda  for  Sustainable  Development  and  the  Paris  Agreement  make  it  clear  that 
reform of the financial system is central to putting our economies on a sustainable growth path. 
Reorienting  private  capital  flows  to  more  sustainable  investments  requires  a  comprehensive 
and  deep  rethinking  of  our  financial  framework.  A  unified  taxonomy  and  a  monitoring 
mechanism of capital flows towards sustainable investments will support the Capital Markets 
Union. 

Third,  sustainable  finance  forms  part  of  the  Commission's  efforts  to  mobilise  private 
capital towards green and sustainable investments to enable the transition to a low-carbon 
economy and shows the EU's strong commitment to mitigate risks posed by climate change 
and  environmental  challenges.  In  particular,  there  is  the  need  to  equip  the  EU  financial 
sector  with  the  right  instruments  to  promote  sustainable  finance  and  ensure  financial 
stability.  A  clear  and  unified  EU  taxonomy  (and  related  concept  of  environmental 
sustainable  investment)  would  provide  the  basis  for  further  action  in  areas  such  as 
standards, labels, disclosures, and any future changes to prudential rules.  

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1.6. 

Duration and financial impact  

 Proposal/initiative of limited duration  

–    Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY  

–    Financial impact from YYYY to YYYY 

 Proposal/initiative of unlimited duration 

–  Implementation with a start-up period from YYYY to YYYY, 

–  followed by full-scale operation. 
1.7.  Management mode(s) planned57  

 Direct management by the Commission through 

–    executive agencies  

 Shared management with the Member States  

 Indirect management by entrusting budget implementation tasks to: 

 international organisations and their agencies (to be specified); 

the EIB and the European Investment Fund; 

 bodies referred to in Articles 208 and 209; 

 public law bodies; 

  bodies  governed  by  private  law  with  a  public  service  mission  to  the  extent  that  they 
provide adequate financial guarantees; 

  bodies  governed  by  the  private  law  of  a  Member  State  that  are  entrusted  with  the 
implementation  of  a  public-private  partnership  and  that  provide  adequate  financial 
guarantees; 

 persons entrusted with the implementation of specific actions in the CFSP pursuant to 
Title V of the TEU, and identified in the relevant basic act. 

Comments  

N/A

57 

Details of management modes and references to the Financial Regulation may be found on the BudgWeb site: 
https://myintracomm.ec.europa.eu/budgweb/EN/man/budgmanag/Pages/budgmanag.aspx. 

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2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

Specify frequency and conditions. 

The  proposal  puts  forward  the  establishment  of  a  public-private  platform  on  sustainable 
finance to monitor key developments to ensure the progress, scale-up and adaptability of 
the EU sustainability taxonomy. Regarding the involvement of the ESAs and the EEA, the 
Commission will monitor it based on the tasks envisaged in the proposal. 

2.2.  Management and control system  

2.2.1.  Risk(s) identified  

In  relation  to  the  legal,  economic,  efficient  and  effective  use  of  appropriations  resulting 
from the actions to be carried out by the ESAs and the EEA in the context of this proposal, 
this initiative does not bring about new significant risks that would not be covered by an 
existing internal control framework. 

The  actions  to  be  carried  out  in  the  context  of  this  proposal  will  start  in  2020,  and  will 
further continue and need to be envisaged under the new Multiannual Financial Framework 
(MFF). 

2.2.2.  Control method(s) envisaged  

Management and control systems are provided in the Regulations currently governing the 
functionning  of  the  ESAs  and  the  EEA.  These  bodies  work  closely  together  with  the 
Internal  Audit  Service  of  the  Commission  to  ensure  that  the  appropriate  standards  are 
observed in all areas of the internal control framework.  

Every  year,  the  European  Parliament,  following  a  recommendation  from  the  Council, 
grants discharge to each ESA and the EEA for the implementation of their budget.  

2.3.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures. 

For  the  purpose  of  combating  fraud,  corruption  and  any  other  illegal  activity,  the 
provisions  of  Regulation  (EU,  Euratom)  N°883/2013  of  the  European  Parliament  and  of 
the  Council  of  11  September  2013  concerning  investigations  conducted  by  the  European 
Anti-Fraud  Office  (OLAF)  apply  to  the  ESAs  and  the  EEA  without  any  restriction.  The 
ESAs  and  the  EEA  have  a  dedicated  anti-fraud  strategy  and  resulting  action  plan.  In 
addition  the  Regulations  establishing  the  ESAs  and  the  EEA,  as  well  as  the  ESAs' 
Financial  Regulations  set  out  the  provisions  on  implementation  and  control  of  the  ESAs' 
and  EEA's  budgets  and  applicable  financial  rules,  including  those  aimed  at  preventing 
fraud and irregularities.  

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3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget  line(s) 
affected  

  Existing budget lines  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Heading of 
multiannual financial 
framework 

Number  

1a) 
Competitivenes
s for growth 
and jobs 

12.0201FISMA 

12.0204 EBA 

12.0205 EIOPA 

12.0206 ESMA 

Type of  
expenditure 

Diff./Non-
diff.58 

Diff. 

Diff. 

Diff. 

Diff. 

from 
EFTA 
countries
59 

NO 

NO 

NO 

NO 

Contribution  

from 
candidate 
countries60 

from third 
countries 

within the meaning 
of Article 21(2)(b) 
of the Financial 
Regulation  

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

Budget line 

Type of  
expenditure 

Contribution  

Heading of 
multiannual financial 
framework 

Number  

2 – Sustainable 
growth: Natural 
resources  

07.0203 DG ENV  

07.0206 EEA 

Diff.61 

Diff. 

Diff. 

from 
EFTA 
countries
62 

NO 

NO 

from 
candidate 
countries63 

from third 
countries 

within the meaning 
of Article 21(2)(b) 
of the Financial 
Regulation  

NO 

NO 

NO 

NO 

NO 

NO 

Budget line 

Heading of 
multiannual financial 
framework 

Number  

Type of  
expenditure 

Non-diff.64 

Contribution  

from 
EFTA 
countries
65 

from 
candidate 
countries66 

from third 
countries 

within the meaning 
of Article 21(2)(b) 
of the Financial 
Regulation  

58 
59 
60 
61 
62 
63 
64 
65 

Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations. 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidates from the Western Balkans. 
Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations. 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidates from the Western Balkans. 
Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations. 
EFTA: European Free Trade Association.  

EN 

44 

  EN 

 
 
 
 
 
 
                                                 
5 – 
Administrative 
expenditure  

12 01 01 01 DG FISMA  

Human resources 
Administrative costs  

07 01 01 01 DG ENV 

34 01 01 01 DG CLIMA 

29 01 01 01 ESTAT 

Non-diff. 

NO 

NO 

NO 

NO 

Non-diff. 

Non-diff. 

Non-diff. 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

NO 

  New budget lines requested  

In order of multiannual financial framework headings and budget lines. 

Heading of 
multiannual financial 
framework 

Budget line 

Type of 
expenditure 

Contribution  

Number  
[Heading……………………………
…………] 

Diff./non-
diff. 

from 
EFTA 
countries 

from 
candidate 
countries 

from third 
countries 

within the meaning 
of Article 21(2)(b) 
of the Financial 
Regulation  

[XX.YY.YY.YY] 

YES/N
O 

YES/N
O 

YES/N
O 

YES/NO 

66 

Candidate countries and, where applicable, potential candidates from the Western Balkans. 

EN 

45 

  EN 

 
 
 
 
 
                                                                                                                                                                        
3.2. 

Estimated impact on expenditure  

3.2.1. 

Summary of estimated impact on expenditure  

Heading of multiannual financial  
framework  

1a) 

Competitiveness for growth and jobs  

EUR million (to three decimal places)67 

DG FISMA 

FISMA 

TOTAL appropriations 
for FISMA 

Commitments 
Payments 

Commitments 

Payments 

(1) 

(2) 

=1+1a 
+3a 

=2+2a 

+3b 

0.050 
0.050 
0.050 

0.050 
0.050 
0.050 

0.050 
0.050 
0.050 

0.050 
0.050 
0.050 

0.050 

0.050 

0.050 

0.050 

Year 
2020 

Year 
202168 

Year 
2022 

Year 
2023 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6)69 

TOTAL 

EBA 

Year 
2020 

Year 
2021 

Year 
2022 

Year 
2023 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

Title 1: Staff expenditure  

Title 

2: 

Infrastructure 

and 

operating 

Commitments 

Payments 

Commitments 

(1) 

(2) 

(1a) 

0.034 

0.034 

0.034 
0.034 

0.034 
0.034 

0.034 
0.034 

67 
68 

69 

EN 

Small difference in the total amount are due to rounding the numbers to three decimal places. 
The expenditure for the period after 2020 is compatible with the Commission proposals for the next Multiannual Financial Framework (2021-2027) published on 2 May 
2018. 
The number of years to complete the work of the Platform cannot be estimated at this time; therefore, the table shows the impact on expenditure only for the first four years 
of existence of the Platform. It is expected that the Platform will exist at least during the period of the next MFF (i.e. up to 2027). 

46 

EN 

0.200 
0.200 
0.200 

0.200 

TOTAL (due to co-
financing 
arrangrement 60/40, 
only 40% is 
mentioned here) 

0.136 
0.136 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
expenditure 

Title 3: Operational expenditure  

TOTAL appropriations 
for EBA 

EIOPA 

Title 1: Staff expenditure  

2: 

Title 
expenditure 

Infrastructure 

and 

operating 

Title 3: Operational expenditure  

TOTAL appropriations 
for EIOPA 

Payments 

Commitments 

Payments 

Commitments 

Payments 

Commitments 

Payments 

Commitments 

Payments 

Commitments 

Payments 

Commitments 

Payments 

(2a) 

(3a) 

(3b) 

=1+1a 
+3a 

=2+2a 

+3b 

(1) 

(2) 

(1a) 

(2a) 

(3a) 

(3b) 

=1+1a 
+3a 

=2+2a 

+3b 

0.034 

0.034 

0.034 

0.034 

0.034 

0.034 

0.034 

0.034 

Year 
2020 

Year 
2021 

Year 
2022 

Year 
2023 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

0.029 
0.029 

0.029 
0.029 

0.029 
0.029 

0.029 
0.029 

0.029 

0.029 

0.029 

0.029 

0.029 

0.029 

0.029 

0.029 

ESMA 

Year 
2020 

Year 
2021 

Year 
2022 

Year 
2023 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

0.136 

0.136 

TOTAL (due to co-
financing 
arrangrement 60/40, 
only 40% is 
mentioned here) 

0.116 
0.116 

0.116 

0.116 

TOTAL (due to co-
financing 
arrangrement 60/40, 
only 40% is 
mentioned here) 

EN 

47 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Title 1: Staff expenditure  

Commitments 

Payments 

2: 

Title 
expenditure 

Infrastructure 

and 

operating 

Commitments 

Title 3: Operational expenditure  

TOTAL appropriations 
for ESMA 

0.066 
0.066 

0.066 
0.066 

0.066 
0.066 

0.066 
0.066 

0.066 

0.066 

0.066 

0.066 

0.066 

0.066 

0.066 

0.066 

(1) 

(2) 

(1a) 

(2a) 

(3a) 

(3b) 

=1+1a 
+3a 

=2+2a 

+3b 

Payments 

Commitments 

Payments 

Commitments 

Payments 

TOTAL appropriations 
under HEADING 1 
of the multiannual financial framework  

(Total  commitments  = 
Total payments) 

0.179 

0.179 

0.179 

0.179 

Heading of multiannual financial  
framework  

2 

Sustainable growth: Natural resources 

0.264 
0.264 

0.264 

0.264 

0.714 

DG ENV 

ENV (studies) 

TOTAL appropriations 
for DG ENV 

Year 
2020 

Year 
2021 

Year 
2022 

Year 
2023 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

TOTAL 

Commitments 
Payments 

Commitments 

Payments 

(1) 

(2) 

=1+1a 
+3a 

=2+2a 

+3b 

0.500 
0.500 
0.500 

0.500 
0.500 
0.500 

0.500 
0.500 
0.500 

0.500 
0.500 
0.500 

0.500 

0.500 

0.500 

0.500 

2.000 
2.000 
2.000 

2.000 

EN 

48 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year 
2020 

Year 
2021 

Year 
2022 

Year 
2023 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

TOTAL 

EEA 

Title 1: Staff expenditure  

2: 

Title 
expenditure 

Infrastructure 

and 

operating 

Title 3: Operational expenditure  

TOTAL appropriations 
for EEA 

Commitments 

Payments 

Commitments 

Payments 

Commitments 

Payments 

Commitments 

Payments 

(1) 

(2) 

(1a) 

(2a) 

(3a) 

(3b) 

=1+1a 
+3a 

=2+2a 

+3b 

0.291 
0.291 

0.291 
0.291 

0.291 
0.291 

0.291 
0.291 

0.291 

0.291 

0.291 

0.291 

0.291 

0.291 

0.291 

0.291 

TOTAL appropriations 
under HEADING 2 
of the multiannual financial framework  

(Total  commitments  = 
Total payments) 

0.791 

0.791 

0.791 

0.791 

Heading of multiannual financial  
framework  

5 

Administrative expenditure 

1.164 

1.164 

1.164 

1.164 

3.164 

European Commission 

Year 
2020 

Year 
2021 

Year 
2022 

Year 
2023 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6)  

TOTAL 

EUR million (to three decimal places) 

EN 

49 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Human Resources  

1.430 

1.430 

1.430 

1.430 

  Other  administrative  expenditure  (conference  and  meeting 
costs) 

0.224 

0.224 

0.224 

0.224 

TOTAL appropriations 
under HEADING 5  
of the multiannual financial framework  

(Total  commitments  = 
Total payments) 

1.654 

1.654 

1.654 

1.654 

5.720 

0.896 

6.616 

Year 
2020 

Year 
2021 

Year 
2022 

Year 
2023 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

TOTAL 

EUR million (to three decimal places) 

TOTAL appropriations  
under HEADINGS 1 to 5 
of the multiannual financial framework  

Commitments 

2.624 

2.624 

2.624 

2.624 

Payments 

2.624 

2.624 

2.624 

2.624 

10.496 

10.496 

EN 

50 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.2.  Estimated impact on operational appropriations  

–    The proposal/initiative does not require the use of operational appropriations  

–    The proposal/initiative requires the use of operational appropriations, as explained below: 

Commitment appropriations in EUR million (to three decimal places) 

Year 
2020 

Year 
202170 

Year 
2022 

Year 
2023 

OUTPUTS 

Enter as many years as necessary to show the 
duration of the impact (see point 1.6)71 

TOTAL 

o
N

Cost  N

o

Cost 

o
N

Cost 

o
N

Cost  N

o

Cost  N

o

Cost  N

o

Cost 

Total 
No 

Total 
cost 

EBA 

Indicate 
objectives and 
outputs  

 

Type72 

Avera
ge 
cost 

SPECIFIC OBJECTIVE No 173 Support 
the Platform in its work on taxonomy, 
provide input for the SF Observatory 
and carry out actions of the SF Action 
Plan  

Provide analysis, 
guidance, 
reports, data and 
advice 

Analysis, 
guidance, 
reports, 
data and 
advice 

0.034 
(per 
FTE) 

1 

0.034  

1 

0.034  

1  

0.034  

1  

0.034  

Subtotal for specific objective No 1 

0.034  

0.034  

0.034  

0.034  

1 

0.136 

0.136 

70 
71 

72 
73 

EN 

The expenditure for the period after 2020 is compatible with the Commission proposals for the next Multiannual Financial Framework (2021-2027) published on 2 May 2018. 
The  number  of  years  to  complete  the  work  of  the  Platform  cannot  be  estimated  at  this  time;  therefore,  the  table  shows  the  impact  on  expenditure  only  for  the  first  four  years  of 
existence of the Platform. It is expected that the Platform will exist at least during the period of the next MFF (i.e. up to 2027). 
Outputs are products and services to be supplied (e.g. number of student exchanges financed, number of km of roads built, etc.). 
As described in point 1.4.2. ‘Specific objective(s)…’ 

51 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
TOTAL COST 

0.034  

0.034  

0.034  

0.034  

0.136 

EIOPA 

Indicate 
objectives and 
outputs  

 

Type74 

Year 
2020 

Year 
2021 

Year 
2022 

Year 
2023 

OUTPUTS 

Enter as many years as necessary to show the 
duration of the impact (see point 1.6) 

TOTAL 

Cost  N

o

Cost 

o
N

Cost 

o
N

Cost  N

o

Cost  N

o

Cost  N

o

Cost 

Total 
No 

Total 
cost 

Average 

o

cost  N

SPECIFIC OBJECTIVE No 175 
Support the Platform in its work on 
taxonomy, provide input for the SF 
Observatory and carry out actions of 
the SF Action Plan 

Provide analysis, 
guidance, 
reports, data and 
advice 

Analysis, 
guidance, 
reports, 
data and 
advice 

0.029 

1 

0.029 

1 

0.029 

1 

0.029 

1 

0.029 

Subtotal for specific objective No 1 

0.029 

0.029 

0.029 

0.029 

0.115 

1 

0.115 

74 
75 

Outputs are products and services to be supplied (e.g. number of student exchanges financed, number of km of roads built, etc.). 
As described in point 1.4.2. ‘Specific objective(s)…’ 

EN 

52 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
TOTAL COST 

0.029 

0.029 

0.029 

0.029 

0.115 

ESMA 

Indicate 
objectives and 
outputs  

 

Type76 

Year 
2020 

Year 
2021 

Year 
2022 

Year 
2023 

OUTPUTS 

Enter as many years as necessary to show the 
duration of the impact (see point 1.6) 

TOTAL 

Cost  N

o

Cost 

o
N

Cost 

o
N

Cost  N

o

Cost  N

o

Cost  N

o

Cost 

Total 
No 

Total 
cost 

Average 

o

cost  N

SPECIFIC OBJECTIVE No 177 
Support the Platform in its work on 
taxonomy, provide input for the SF 
Observatory and carry out actions of 
the SF Action Plan 

Provide analysis, 
guidance, 
reports, data and 
advice 

Analysis, 
guidance, 
reports, 
data and 
advice 

0.066 
(per 
FTE) 

Subtotal for specific objective No 1 

TOTAL COST 

1 

0.066 

1 

0.066 

1 

0.066 

1 

0.066 

1 

0.263 

0.066 

0.066 

0.066 

0.066 

0.066 

0.066 

0.066 

0.066 

0.263 

0.263 

76 
77 

Outputs are products and services to be supplied (e.g. number of student exchanges financed, number of km of roads built, etc.). 
As described in point 1.4.2. ‘Specific objective(s)…’ 

EN 

53 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Year 
2020 

Year 
2021 

Year 
2022 

Year 
2023 

OUTPUTS 

Enter as many years as necessary to show the 
duration of the impact (see point 1.6) 

TOTAL 

o
N

Cost  N

o

Cost 

o
N

Cost 

o
N

Cost  N

o

Cost  N

o

Cost  N

o

Cost 

Total 
No 

Total 
cost 

EEA 

Indicate 
objectives and 
outputs  

 

Type78 

Avera
ge 
cost 

SPECIFIC OBJECTIVE No 179 
Support the Platform in its work on 
taxonomy, standards and lables, as 
well as provide input for the SF 
Observatory and advice to Member 
States on developing their low-carbon 
and sustainable investment strategies 

Provide analysis, 
guidance, 
reports, data and 
advice 

Analysis, 
guidance, 
reports, 
data and 
advice 

0.145 

2 

0.291 

2 

0.291 

2 

0.291 

2 

0.291 

2 

1.164 

Subtotal for specific objective No 1 

0.291 

0.291 

TOTAL COST 

0.291 

0.291 

0.291 

0.291 

0.291 

0.291 

1.164 

1.164 

FISMA  

78 
79 

Outputs are products and services to be supplied (e.g. number of student exchanges financed, number of km of roads built, etc.). 
As described in point 1.4.2. ‘Specific objective(s)…’ 

EN 

54 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Year 
2020 

Year 
2021 

Year 
2022 

Year 
2023 

OUTPUTS 

Enter as many years as necessary to show the 
duration of the impact (see point 1.6) 

TOTAL 

o
N

Cost  N

o

Cost 

o
N

Cost 

o
N

Cost  N

o

Cost  N

o

Cost  N

o

Cost 

Total 
No 

Total 
cost 

Indicate 
objectives and 
outputs  

 

Type80 

Avera
ge 
cost 

SPECIFIC OBJECTIVE No 181 Use 
of an IT system for communication 
by the Platform members/observers 

- Add-ins for the 
Confluence 
collaborative 
platform  

Add-
ins 

0.025 

2 

0.050 

2 

0.050 

2 

0.050 

2 

0.050 

8 

0.200 

TOTAL COST 

0.050 

0.050 

0.050 

0.050 

0.200 

DG ENV 

Indicate 
objectives and 
outputs  

Year 
2020 

Year 
2021 

Year 
2022 

Year 
2023 

OUTPUTS 

Enter as many years as necessary to show the 
duration of the impact (see point 1.6) 

TOTAL 

 

Type82 

Avera
ge 
cost 

o
N

Cost  N

o

Cost 

o
N

Cost 

o
N

Cost  N

o

Cost  N

o

Cost  N

o

Cost 

Total 
No 

Total 
cost 

80 
81 
82 

Outputs are products and services to be supplied (e.g. number of student exchanges financed, number of km of roads built, etc.). 
As described in point 1.4.2. ‘Specific objective(s)…’ 
Outputs are products and services to be supplied (e.g. number of student exchanges financed, number of km of roads built, etc.). 

EN 

55 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
SPECIFIC OBJECTIVE No 1 Use 
of research/surveys/studies to 
support the work of the Platform 

- Conduct of 
research/survey/ 
studies 

Resear
ch/surv
ey/ 
studies 

0.250 

2 

0.500 

2 

0.500 

2 

0.500 

2 

0.500 

8 

2.000 

TOTAL COST 

0.500 

0.500 

0.500 

0.500 

2.000 

EN 

56 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.3.  Estimated impact on human resources  

3.2.3.1.  Summary  

–    The  proposal/initiative  does  not  require  the  use  of  appropriations  of  an 

administrative nature  

–    The proposal/initiative requires the use of appropriations of an administrative 

nature, as explained below: 

EUR million (to three decimal places) 

EBA (1 Contract 
staff) 

Year 
2020 

Year 
202183 

Year 
2022 

Year 
2023 

Enter as many years as necessary to 
show the duration of the impact (see 
point 1.6)84 

TOTAL 

Officials (AD Grades) 

Officials 
grades) 

(AST 

Contract staff 

0.034 

0.034 

0.034 

0.034 

0.136 

Temporary staff  

Seconded National 
Experts 

TOTAL 

0.034 

0.034 

0.034 

0.034 

0.136 

It is assumed that the planned recruitment date is 01 January 2020. 

EIOPA (1 Contract 
staff) 

Year 
2020  

Year 
2021 

Year 
2022 

Year 
2023 

Enter as many years as necessary to 
show the duration of the impact (see 
point 1.6) 

TOTAL 

Officials (AD Grades) 

Officials 
grades) 

(AST 

Contract staff 

0.029 

0.029 

0.029 

0.029 

Temporary staff  

Seconded National 
Experts 

TOTAL 

0.029 

0.029 

0.029 

0.029 

0.116 

0.116 

83 

84 

The  expenditure  for  the  period  after  2020  is  compatible  with  the  Commission  proposals  for  the  next 
Multiannual Financial Framework (2021-2027) published on 2 May 2018. 
The number of years to complete the work of the Platform cannot be estimated at this time; therefore, 
the table shows the impact on expenditure only for the first four years of existence of the Platform. It is 
expected that the Platform will exist at least during the period of the next MFF (i.e. up to 2027).  

EN 

57 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
It is assumed that the planned recruitment date is 01 January 2020. 

ESMA (1 
Temporary staff) 

Year 
2020  

Year 
2021 

Year 
2022 

Year 
2023 

Enter as many years as necessary to 
show the duration of the impact (see 
point 1.6) 

TOTAL 

Officials (AD Grades) 

Officials 
grades) 

(AST 

Contract staff 

Temporary staff  

0.066 

0.066 

0.066 

0.066 

Seconded National 
Experts 

TOTAL 

0.066 

0.066 

0.066 

0.066 

It is assumed that the planned recruitment date is 01 January 2020. 

0.264 

0.264 

Year 
2020  

Year 
2021 

Year 
2022 

Year 
2023 

Enter as many years as necessary to 
show the duration of the impact (see 
point 1.6) 

TOTAL 

EEA (1 Temporary 
staff and 1 Contract 
staff) 

Officials (AD Grades) 

Officials 
grades) 

(AST 

Contract staff 

0.099 

0.099 

0.099 

0.099 

Temporary staff  

0.191 

0.191 

0.191 

0.191 

Seconded National 
Experts 

TOTAL 

0.291 

0.291 

0.291 

0.291 

It is assumed that the planned recruitment date is 01 January 2020. 

European 
Commission (10 
Officials)85  

Year 
2020 86 

Year 
2021 

Year 
2022 

Year 
2023 

Enter as many years as necessary to 
show the duration of the impact (see 
point 1.6) 

Officials (AD Grades) 

1.144 

1.144 

1.144 

1.144 

0.396 

0.764 

1.164 

TOTAL 

4.576 

85 

86 

EN 

The  human  resources  required  will  be  met  by  staff  from  the  DGs  who  are  already  assigned  to 
management of the action and/or have been redeployed within the DGs, together if necessary with any 
additional allocation, which may be granted to the managing DG under the annual allocation procedure 
and in the light of budgetary constraints. 

58 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
                                                 
 
Officials (AST grades) 

0.286 

0.286 

0.286 

0.286 

1.144 

Contract staff 

Temporary staff  

Seconded National 
Experts 

TOTAL 

1.430 

1.430 

1.430 

1.430 

5.720 

EN 

59 

  EN 

 
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
 
  
  
  
 
 
3.2.3.2.  Estimated  requirements  of  human  resources  for  the  parent  DG  and  associated 

DGs/Services  

–    The proposal/initiative does not require the use of human resources.  

–    The  proposal/initiative  requires  the  use  of  human  resources,  as  explained 

below: 

Estimate to be expressed in full amounts (or at most to one decimal place) 

Year 
2020 

Year 
202187 

Year 
2022 

Year 
2023 

Enter as many years as 
necessary to show the 
duration of the impact (see 
point 1.6)88 

5 

2 

2 

1 

5 

2 

2 

1 

5 

2 

2 

1 

5 

2 

2 

1 

 Establishment plan posts (officials and 

temporary staff)89 

12 01 01 01 FISMA 

07 01 01 01 ENV 

34 01 01 01 CLIMA 

29 01 01 01 EUROSTAT 

XX 01 01 02 (Delegations) 

XX 01 05 01 (Indirect research) 

10 01 05 01 (Direct research) 

 External staff (in Full Time Equivalent 

unit: FTE)90 

XX 01 02 01 (AC, END, INT from 
the ‘global envelope’) 

XX 01 02 02 (AC, AL, END, INT 
and JPD in the Delegations) 

XX 01 04 
yy91 

- at 
Headquarters92 

- in 
Delegations  

XX 01 05 02 (AC, END, INT – 

87 

88 

89 

90 

91 
92 

The  expenditure  for  the  period  after  2020  is  compatible  with  the  Commission  proposals  for  the  next 
Multiannual Financial Framework (2021-2027) published on 2 May 2018. 
The number of years to complete the work of the Platform cannot be estimated at this time; therefore, 
the table shows the impact on expenditure only for the first four years of existence of the Platform. It is 
expected that the Platform will exist at least during the period of the next MFF (i.e. up to 2027). 
The  human  resources  required  will  be  met  by  staff  from  the  DGs  who  are  already  assigned  to 
management of the action and/or have been redeployed within the DGs, together if necessary with any 
additional allocation, which may be granted to the managing DG under the annual allocation procedure 
and in the light of budgetary constraints. 
AC = Contract Staff; AL = Local Staff; END = Seconded National Expert; INT = agency staff; JPD = 
Junior Professionals in Delegations.  
Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines). 
Mainly for the Structural Funds, the European Agricultural Fund for Rural Development (EAFRD) and 
the European Fisheries Fund (EFF). 

EN 

60 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Indirect research) 

10 01 05 02 (AC, END, INT – 
Direct research) 

Other budget lines (specify) 

TOTAL 

10 

10 

10 

10 

XX is the policy area or budget title concerned. 

Description of tasks to be carried out: 

Officials and temporary staff 

External staff 

The Commission will be invovled in all of the targeted actions mentioned under point 
1.4.2, and in particular with the management of the aforementioned public/private 
platform (e.g. organisation of meetings for the Platform and any sub-groups, reporting 
on the outcome, consulting stakeholders, preparing legislative proposals, supporting 
the observatory/advisory, liasing with the ESAs and the EEA, maintaining the IT 
collaborative tool, reimbursement of experts and other secretarial tasks, etc.). 

Description  of  the  calculation  of  cost  for  FTE  units  should  be  included  in  the  Annex  V, 
section 3.  

EN 

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3.2.4.  Compatibility with the current multiannual financial framework  

–    The  proposal/initiative  is  compatible  with  the  current  multiannual  financial 

framework and the post-2020 MFF proposal.  

–    The proposal/initiative will entail reprogramming of the relevant heading in the 

multiannual financial framework. 

Explain what reprogramming is required, specifying the budget lines concerned and the corresponding 
amounts. 

–    The  proposal/initiative  requires  application  of  the  flexibility  instrument  or 

revision of the multiannual financial framework93. 

Explain what is required, specifying the headings and budget lines concerned and the corresponding 
amounts. 

3.2.5.  Third-party contributions  

–   The proposal/initiative does not provide for co-financing by third parties.  

–   The proposal/initiative provides for the co-financing estimated below: 

EUR million (to three decimal places) 

NCAs94 

Year 
2020 

Year 
202195 

Year 
2022 

Year 
2023 

Enter as many years as necessary 
to show the duration of the 
impact (see point 1.6)96 

EBA 

EIOPA 

ESMA 

0.051 

0.043 

0.098 

0.051 

0.043 

0.098 

0.051 

0.043 

0.098 

0.051 

0.043 

0.098 

TOTAL  appropriations 
co-financed  

0.193 

0.193 

0.193 

0.193 

Total (due 
to co-
financing 
arrangremen
t 60/40, only 
60% is 
mentioned 
here) 

0.204 

0.173 

0.394 

0.771 

93 

94 

95 

96 

See  Articles  11  and  17  of  Council  Regulation  (EU,  Euratom)  No  1311/2013  laying  down  the 
multiannual financial framework for the years 2014-2020. 
Based upon the current governance and funding modalities (i.e. 60% co-financing by Member States' 
national competent authorities and 40% EU contribution) which do not take into account the proposal of 
the Commission on the ESAs' review that is not yet adopted.  
The  expenditure  for  the  period  after  2020  is  compatible  with  the  Commission  proposals  for  the  next 
Multiannual Financial Framework (2021-2027) published on 2 May 2018.  
The number of years to complete the work of the Platform cannot be estimated at this time; therefore, 
the table shows the impact on expenditure only for the first four years of existence of the Platform. It is 
expected that the Platform will exist at least during the period of the next MFF (i.e. up to 2027). 

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3.3. 

Estimated impact on revenue  

–    The proposal/initiative has no financial impact on revenue. 

–    The proposal/initiative has the following financial impact: 

– 

– 

 

 

on own resources  

on miscellaneous revenue  

Appropriation
s available for 
the current 
financial year 

Budget revenue line: 

Article …………. 

EUR million (to three decimal places) 

Impact of the proposal/initiative97 

Year 
2020 

Year 
2021 

Year 
2022 

Year 
2023 

Enter as many years as necessary to show 
the duration of the impact (see point 1.6) 

For miscellaneous ‘assigned’ revenue, specify the budget expenditure line(s) affected. 
Specify the method for calculating the impact on revenue.  

97 

As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net 
amounts, i.e. gross amounts after deduction of 20 % for collection costs. 

EN 

63 

  EN