How does the European green taxonomy affect business finances?


Last year, the European Commission published an initial round of applicable rules for the sustainable financial Taxonomy of the EU, describing the technical criteria to be fulfilled by companies in order to obtain a green investment certificate in Europe.

The purpose of the Taxonomy is to provide suitable definitions to companies, investors and those with political responsibility for business activities that can be considered to be environmentally sustainable or, in other words, to offer a screening system for companies and investors to determine whether a business activity is ‘green’ or not.

The Regulation establishing these technical selection criteria is Commission Delegated Regulation (EU) 2021/2139 and Commission Delegated Regulation (EU) 2021/2178, including the content and presentation of the information that those companies subject to articles 19.1 or 29.1 of Directive 2013/34/EU must disclose in respect of sustainable business activities from an environmental perspective, and the specification of the methodology for complying with the obligation to disclose the information.

Obligations of immediate effects

This new tsunami in green regulation matters involves certain obligations and immediate effects in respect of companies. In this sense, we should emphasise the interpretation of the Spanish Institute of Chartered Accountants (Instituto de Censores Jurados de Cuentas de España) of requests for the verification of the Non-Financial Information Statement (NFIS). These obligations are related to the information to be included in the Non-Financial Information Statement by those companies subject to them, since their activities are considered to be environmentally sustainable business activities, according to the regulation.

These obligations consisting of describing the adjustment of their activities to the new taxonomy and to the procedures carried out for preparing their indicators. In addition, they must report on the proportion of their invoicing coming from products or services related to business activities considered to be environmentally sustainable. Finally, they must also include information on the proportion of their investments in fixed capital or property (CapEX) and the proportion of their operating expenses (OpEx), related to assets or processes associated with business activities considered to be environmentally sustainable.

This information must be included in the NFIS corresponding to the financial year 2021 as the Regulation is in force and directly applicable, i.e. it does not need to be transposed by the Member States. This affects public interest entities which, as at the closing date of their balance sheets, exceed the criterion of an average number of employees of above 500 during the financial year, and which are classified as large-sized entities (i.e. for two consecutive years, they exceed two of the three criteria of more than 250 employees on average, more than 40 million euros of invoicing, or more than 20 million euros of assets).

A long path lies ahead for most companies comprising our business fabric, but we should recall that the first step is always the most difficult.

M. Eugènia Bailach Aspa, partner at Auren Spain