Insights

The Malta Financial Services Authority (MFSA) has published a circular informing stakeholders of the entry into force and application of Commission Delegated Regulation (EU) 2021/2178 of the 6 July 2021 (the “Disclosures Delegated Act”), which was published in the Official Journal of the European Union on the 10 December 2021.

Background

Article 8 of Regulation (EU) 2020/852 of 18 June 2020 (the “Taxonomy Regulation”) imposes an obligation on any undertaking publishing non-financial information pursuant to Article 19a or Article 29a of Directive 2013/34/EU of 26 June 2013 (the “Accounting Directive”) to include in its non-financial statement or consolidated non-financial statement information on how and to what extent that undertaking’s activities are associated with economic activities which qualify as environmentally sustainable under Articles 3 and 9 of the Taxonomy Regulation.

In other words, the implications of the Disclosures Delegated Act will principally affect the management report (or consolidated management report) of: (1) large undertakings which are public-interest entities (“PIEs”), exceeding on their balance sheet dates the criterion of the average number of 500 employees during the financial year, and (2) PIEs which are parent undertakings of a large group exceeding on its balance sheet dates (on a consolidated basis) the criterion of the average number of 500 employees during the financial year.

Objective and entry into force and application

The circular highlights the objective of the Disclosures Delegated Act as that of increasing transparency in the market by requiring those undertakings subject to the publication of non-financial information in their non-financial statement, to disclose specific key performance indicators. The Disclosures Delegated Act supplements this objective further by setting out specific disclosure requirements relating to environmentally sustainable economic activities.

The Disclosures Delegated Act will become applicable as at the 1 January 2022, subject to specific reporting timelines provided in Article 10 thereof.

The European Commission has published a set of frequently asked questions which may be used for guidance purposes.