The European Commission’s financial services department has tabled delays and warned of possible repeals to a raft of sustainable finance regulations, as part of another initiative under its simplification mandate.
The new initiative is separate from the executive’s sustainability Omnibus, which covers the bloc’s EU Taxonomy, Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive.
Deliberations and nereceivediations on the alters to these three regulations are ongoing, and a European Parliament vote is expected to take place next week.
The new delays and possible repeals of various financial regulations – dubbed the Commission’s “kill list” by EU observers – are focapplyd on Level 2 legal texts, which outline technical and implementation details of core Level 1 rules.
The list sets out “non-essential” acts that will be deprioritised in an effort to further reduce red tape. This means they will not be adopted before October 2027, and the Commission could also prepare proposals to amconclude or scrap some of the rules.
A spokesperson for the Commission informed Responsible Investor that this is a “pragmatic approach that can deliver simplification quickly”.
The plans will impact the EU’s Sustainable Finance Disclosure Regulation (SFDR) – due to be reviewed at the conclude of the year – European Sustainability Reporting Standards (ESRS) under the CSRD, the ESG Ratings Regulation, EU Green Bond Standard and sustainability requirements under Solvency II.
In total, 24 technical measures related to these regulations have been listed as “non-essential”.
In a letter to the heads of the three European Supervisory Authorities (ESAs) and to the chair of the Anti-Money Laundering Authority, DG FISMA head John Berrigan wrote that, in the area of financial services, the EU acquis has “grown significantly”.
He noted that the Level 1 acts adopted by the co-legislators under the last European Parliamentary term have seen the Commission adopt 430 Level 2 acts. “Such a large number of measures to be adopted is a concern for stakeholders,” Berrigan wrote.
At Level 1, the Parliament and Council of the EU are required to approve any alters to a basic law proposed by the Commission. At Level 2, the executive can adopt, adapt and update technical implementing measures without the assist of consultative bodies.
Berrigan stated the Level 2 texts have been categorised into three buckets, in consultation with the Parliament and Council. Of the more than 400 acts, 115 have been identified as “non-essential” for the effective functioning of the Level 1 legislation and for the achievement of EU policy objectives.
“Those non-essential empowerments would increase compliance costs and regulatory complexity for the industest with limited value added, while also demanding significant resources from co-legislators to scrutinise these acts, timely and effectively,” a Commission spokesperson informed RI.
Berrigan stated a “substantial number” of the relevant Level 1 acts will be reviewed in the next two years.
The European Securities and Markets Authority (ESMA) in March wrote to the Commission suggesting delays to several regulations under the financial services department’s remit, but none of these related to sustainable finance regulations.
Impacted delegated acts
One of the largegest alters would be to the ESRS. A delegated act for ESRS reporting in countries outside of the EU, due to be adopted by Q2 2026, is on the Commission’s list of acts to be deprioritised.
EFRAG, which is in the process of revising the ESRS, did not immediately respond to a request for comment.
On SFDR, a total of 10 delegated acts will be impacted. However, this is somewhat expected given the Commission’s upcoming review and potential overhaul of the core text.
One of the three provisions of the EU ESG ratings regulation earmarked by the list relates to a requirement for EU regulatory trio, the ESAs, to develop a disclosure template for institutions which produce ESG ratings for internal purposes – particularly asset managers and other firms providing investment services – that are exempted under the scope of the rules.
The disclosures would necessary to include an overview of the rating methodologies applyd, information on the rating objectives and other details, such as whether AI tools had been leveraged in the rating process.
An EU regulations-focapplyd lawyer informed RI that the inclusion of the provision in the list means it is unclear whether asset managers will no longer be subject to the disclosure requirements, “or whether they will have to attempt to comply in a principles-based manner”.
Another provision included in the list is a requirement for ESMA to develop standards to specify the metadata, and to test and specify the machine-readable format which will be applyd at the European Single Access Point to register the details of ESG data providers licensed to operate in the EU.
For the Solvency II directive – which sets out regulatory requirements for insurers – the Commission will amconclude or repeal the regulatory technical standard on the management of sustainability risks, including sustainability risk plans, originally due to be adopted in the first half of next year.
On the EU Green Bond Standard, the affected delegated acts relate to the supervision and enforcement of the regulation.
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