EU to launch single platform for sustainability and financial data

New plans may also impact Shareholders Rights Directive and ELTIF regulation

The EU is planning to create a platform to give investors “seamless access” to financial and sustainability corporate information in one place, it has said.

The initiative, which has been at the centre of investor demands in recent months and years, comes as part of the ongoing overhaul of Europe’s Non-Financial Reporting Directive (NFRD) and the latest Capital Markets Union (CMU) Action Plan

The platform’s acronym ESAP (for European Single Access Point) will join a long list of existing players and initiatives in the ESG reporting landscape at a high-stake time for the sector, as some come together to offer convergence of their standards and frameworks. 

The CMU Action Plan is based on recommendations published this summer by a High Level Forum (HLF) of 28 experts, who called for the new platform to counter “the lack of easily accessible, reliable, understandable and comparable public information” – an obstacle for companies and smaller EU member states seeking investment.

“A single place for financial and sustainability-related information, which is currently scattered across the EU, will facilitate investors’ access to company data, including that of SMEs,” the experts said.  

The European Commission (EC) stated that accessibility of sustainability data will steer more investments to meet the objectives of the Green Deal. It will set up the new Platform through a legislative proposal in Q3 of 2021, which will require “streamlining EU legislation on disclosure of company data to the public” (i.e. the NFRD, for which the EC expects to finish the first draft of its ongoing revision by January 2021).

The expert forum recommended that the platform is established by the European Securities and Markets Authority, but this has been dropped in the CMU Action Plan, which instead stated: “The details about the platform's information coverage, governance and business model are still to be decided.”

The EC added that the platform will complement the European Financial Transparency Gateway pilot project and the Business Registers Interconnection System.

There has been a growing push for a ‘hub’ for sustainability-related data in Europe to help investors keep on top of new regulation around ESG disclosure.  The Canadian Government has coordinated the creation of a similar platform off the back of recommendations from its Expert Group on Sustainable Finance. 

The Action Plan also touched on cross-border investor engagement – an area that overlaps with the Shareholders Rights Directive II (SRD II). 

The EC will assess whether introducing an EU-wide, harmonised definition of 'shareholder’ is needed, and whether the SRD II needs clarification on rules governing the engagement process between investors, intermediaries and issuers, including proxy voting. 

The EC noted that, due to differences in national company laws, many cross-border investors – in particular smaller ones – are unable to exercise their voting rights. Organising AGMs and sending information between issuers and investors remains also an issue. 

Advocacy group Better Finance has long advocated for measures to overcome these obstacles. A spokesperson told RI that the definition of ‘shareholder’, which is up to member states to determine, should not stop in nominee shareholders but reach the ‘end investor’ or beneficial owner as intended by SRD II.

The spokesperson said: “An EU-wide definition is necessary to ensure that the actual shareholders can exercise their voting rights, instead of financial intermediaries, as is very often the case for cross-border voting within the EU.” 

In addition, the CMU Action Plan aims at reviewing the European Long-term Investment Funds (ELTIFs) Regulation of 2015 by Q3 2021. The EC described ELTIFs – which have struggled to gain traction in Europe – as vehicles that support the EU’s real economy and green growth by providing financing to unlisted companies, listed SMEs, as well as sustainable energy, transport and social infrastructure projects. 

“Since only very few of these pan-European funds currently exist, it would be appropriate to review the legislative framework to facilitate their uptake,” the EC stated.