Legal Bases regarding Sustainable Finance

Legal bases

Based on the European Commission’s Action Plan on Sustainable Finance and the Green Deal, a legal framework on sustainable finance that falls under the Financial Market Authority’s (FMA) scope of competence has been established and constantly developed further. The most relevant overarching legal acts are listed below.

Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector (SFDR; Sustainable Finance Disclosure Regulation) sets out harmonised cross-sector rules for financial market participants and financial advisers on transparency requirements in relation to disclosure about the integration of sustainability risks and consideration of adverse sustainability impacts in their processes and in providing information about the sustainability of financial products. Disclosure obligations include disclosures on website, in pre-contractual documents and in periodic reporting. The transparency provisions contained therein are being specified further by means of delegated acts.

Regulatory Technical Standards have been published in a delegated Regulation to the SFDR (CDR (EU) 2022/1288) that specify the details regarding the content, methodologies and presentation of sustainability-related information. The delegated Regulation also contains reporting templates for Principal Adverse Impacts (PAI) and reporting in accordance with Articles 8 and 9 as an Annex.

In addition, some Q&A have been published in relation to the SFDR, e.g.:

Consolidated questions and answers (Q&A) on the SFDR (Regulation (EU) 2019/2088) and the SFDR Delegated Regulation (Commission Delegated Regulation (EU) 2022/1288) (25 July 2024)

Consolidated questions and answers (Q&A) on the SFDR (Regulation (EU) 2019/2088) and the SFDR Delegated Regulation (Commission Delegated Regulation (EU) 2022/1288) (12 January 2024)

Commission Notice on the interpretation and implementation of certain legal provisions of the EU Taxonomy Regulation and links to the Sustainable Finance Disclosure Regulation 2023/C 211/01 (2023)

Updated Joint ESA Supervisory Statement on the application of the Sustainable Finance Disclosure Regulation (timeline, expectations about the explicit quantification of the product disclosures under Article 5 and 6 of the Taxonomy Regulation, and the use of estimates)
Clarifications on the ESAs’ draft RTS under SFDR (clarifications on the draft regulatory technical standards (RTS) issued under the Sustainable Finance Disclosure Regulation (SFDR), which include the financial product disclosures under the Taxonomy Regulation)


The FMA was named as the competent authority for the enforcement of disclosure obligations in accordance with the Disclosure Regulation as part of the amendments to laws published in Federal Law Gazette I No. 36/2022.

As the central legal act in European regulation, Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 defines whether an economic activity is classified as sustainable in order to be able to determine how environmentally sustainable an investment is.

The legal definition of environmentally sustainable economic activities set out in Article 3 in conjunction with Articles 10 to 18 TR is a central concept, under which an environmentally sustainable economic activity is an economic activity that:

  • makes a substantial contribution to one or more of the laxatively listed environmental objectives (Article  9 TR), i.e.
    • to climate change mitigation (Article 9 point a) TR), or
    • to climate change adaptation (Article 9 point b) TR)
    • to the sustainable use and protection of water and marine resources (Article 9 point c) TR),
    • to the transition to a circular economy (Article 9 point d) TR),
    • to pollution prevention and control (Article 9 point e) TR) or
    • to the protection and restoration of biodiversity and ecosystems (Article 9 point f) TR),

pursuant to Articles 10 to 16 TR (special criteria for each environmental objective);

  • does not lead to significant hard to other environmental objectives  (Article 17 TR);
  • complies with minimum safeguard standards (Article 18 TR) and
  • with the technical valuation criteria defined by the European Commission.

Furthermore, the provisions in the Taxonomy Regulation that are particular relevant for financial market participants are those regarding

  • Transparency in pre-contractual disclosures and in periodic reports regarding environmentally sustainable investments (Article 5 TR), financial products that promote environmental characteristics (Article 6 TR) and other financial products (Article 7 TR) as well as with regard to
  • Transparency of undertakings in non-financial statements (Article 8 TR).

Climate Delegated Act: Commission Delegated Regulation (EU) 2021/2139 of 04 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives.

Complementary Climate Delegated Act: Commission Delegated Regulation (EU) 2022/1214 of 09 March 2022 amending Delegated Regulation (EU) 2021/2139 as regards economic activities in certain energy sectors and Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities.

Amendment of the Climate Delegated Act: Commission Delegated Regulation (EU) 2023/2485 of 27 June 2023 amending Delegated Regulation (EU) 2021/2139 by establishing additional technical screening criteria for determining the conditions under which certain economic activities qualify as contributing substantially to climate change mitigation or climate change adaptation and for determining whether such activities cause no significant harm to any of the other environmental objectives.

Disclosure Delegated Act: Commission Delegated Regulation (EU) 2021/2178 of 06 July 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by specifying the content and presentation of information to be disclosed by undertakings subject to Articles 19a or 29a of Directive 2013/34/EU concerning environmentally sustainable economic activities, and specifying the methodology to comply with that disclosure obligation.

Delegated act on disclosure obligations: Delegated Regulation (EU) 2023/2486 of 27 June 2023 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control, or to the protection and restoration of biodiversity and ecosystems and for determining whether that economic activity causes no significant harm to any of the other environmental objectives and amending Commission Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities

Several sets of FAQs have been published regarding the Taxonomy Regulation, which can be found here.

The FMA was named as the competent authority for the enforcement of disclosure obligations in accordance with Articles 5 to 7 of the Taxonomy Regulation as part of the amendments to laws published in Federal Law Gazette I No. 36/2022.

The Corporate Sustainability Reporting Directive (CSRD) was published in the Official Journal of the European Union on 14.12.2022. It substantially modifies the existing provisions on sustainability reporting. First and foremost, the future Article 19a of the Financial Statements Directive as amended by the CSRD broadens its scope. Whereas only large undertakings that were public-interest entities with an average of more than 500 employees were hitherto required to submit a non-financial statement, this requirement will be extended in the future to cover all large entities, irrespective of whether or not they are exchange-listed, as well as exchange-listed small and medium-sized undertakings, although some simplifications are intended for the latter. Micro-undertakings remain excluded from this requirement. Another significant regulatory aspect is the introduction of binding standards for the sustainability reporting in the future Article 29b of the Financial Statements Directive as amended by the CSRD. The purpose of these standards are to specify and harmonised the sustainability information that is to be disclosed based on the three Environmental, Social and Governance (ESG) reporting pillars. The CSRD also stipulates that mandatory presentation of the sustainability report in the management report – there is no longer an alternative option for a separate report. Furthermore, the obligation is also introduced to have the sustainability report reviewed by an external source.

The European Financial Reporting Advisory Group – (EFRAG) is responsible for the technical drafting of the European Sustainability Reporting Standards (ESRS). The first set of ESRS were adopted in July 2023 with the adoption of Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU of the European Parliament and of the Council as regards sustainability reporting standards.

Pursuant to Article 7 CSRD, the CSRD shall first apply to financial years that begin on/after 01.01.2024 – however applicability will also occur on a gradual basis depending on the type of undertaking. In April 2025, Directive (EU) 2025/794 of the European Parliament and of the Council amending Directive (EU) 2022/2464 and (EU) 2024/1760 amending Directives (EU) 2022/2464 and (EU) 2024/1760 as regards the dates from which Member States are to apply certain corporate sustainability reporting and due diligence requirements was adopted, with applicability being temporarily postponed for certain types of entities.

As the legal act in question is an EU Directive, Member States will need to issue transposing legal acts under national law (national transposing legislation), which is still awaited.

Following the adoption of the final Basel III reform package in response to the financial crisis in December 2017, in December 2023 the European Commission adopted the final Banking Package 2021 to adequately address pandemic, geopolitical and climate-related challenges and their impact on financial market stability.

In December 2023, the European Council and the European Parliament adopted the corresponding legal acts for amending the CRD (Directive (EU) 2024/1619) and the CRR (Regulation (EU) No 1623/2024) that enter into force on 1 January 2025.

The new requirements about “Environmental, Social and Governance Risks” (ESG risks) constitute a major pillar of the Banking Package.

The strengthening of the framework for the requirements for the management of institutions in relation to Environmental, Social and Governance Risks (ESG risks) cover the following aspects among others:

  • harmonised definitions of ESG Risks and further terms
  • introduction of prudential transition plans pursuant to Article 76 (2) CRD
  • integration of ESG risks into the annual “Supervisory Review and Evaluation Process (SREP)”, conferring new supervisory powers for limiting ESG risks.
  • ESG reporting and disclosure requirements are extended to all EU credit institutions; taking into consideration the principle of proportionality for smaller credit institutions

Based on the final banking package, a wide range of mandates in relation with ESG risks were conferred upon the EBA. ESG risks are being integrated into the ongoing updating of EBA Guidelines. For example, the EBA published the Guidelines on the management of environmental, social and governance (ESG) risks.

Regulation (EU) 2019/2089 amending Regulation (EU) 2016/1011 (Benchmark Regulation) as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks, which was published in the EU’s Official Journal on 09.12.2019, and defines two new categories of sustainability benchmarks:

  • EU Climate Transition Benchmarks (“CTBs”), and
  • EU Paris-aligned Benchmarks (“PABs”).

CTBs and PABs are intended to assist investors to align their portfolios to the objectives of the Paris Climate Agreement and pushing investments in sustainable projects and assets, but differ in terms of the level of their demands. CTBs concentrate on pathways to decarbonisation and demand a reduction by at least 30 % in CO2 intensity of the entities in which investments are made compared to the market as a whole and an annual decarbonisation rate of 7 %. In contrast, PABs concentrate specially on the Paris Climate Agreement’s temperature objectives and require a more ambitious reduction of CO2 intensity by 50% compared with the market as a whole, as well as an annual decarbonisation rate of 7 %.

Based on the work of the Technical Expert Group for Sustainable Finance, the European Commission defined Minimum Standards for the Design of the Benchmark Methodology in CDR (EU) 2020/1818, published on 17.07.2020.

Regulation (EU) 2019/2089 has also stipulated disclosure obligations for all benchmark administrators with regard to ESG criteria. As a rule all administrators have been obliged since 30.04.2020 to issue disclosures for all their benchmarks in the methodology as well as in the benchmark statement about whether and to what extent ESG criteria are taken into account when calculating the benchmark. These disclosure obligations were further clarified in Commission Delegated Legal Acts (CDR (EU) 2020/1816 and Delegated Regulation (EU) 2020/1817), which were also published on 17.07.2020.

Amendments to several delegated legal acts in securities and insurance supervision law (Solvency II, IDD, MiFID II, AIFMD, UCITS-D) were published on 21.04.2021. They relate to taking into account of sustainability preferences in investment/insurance advice as well as sustainability factors in product governance as well as the explicit integration for taking into account sustainability risks in securities and investment supervision law (e.g. organisational requirements, risk management, conflicts of interest). The date of application depends on the respective legal act. The majority of them have applied since August 2022. The European Supervisory Authorities ESMA and EIOPA have updated their interpretative materials regarding the sustainability regulations.

The following links list the aforementioned delegated acts as well as the accompanying updated ESMA and EIOPA Guidelines:

Distribution of Financial Instruments (Credit Institutions and Investment Firms):

Asset Management:

  • Commission Delegated Regulation (EU) 2021/1255 of 21 April 2021  amending Delegated Regulation (EU) No 231/2013 as regards the sustainability risks and sustainability factors to be taken into account by Alternative Investment Fund Managers
  • Commission Delegated Directive (EU) 2021/1270 of 21 April 2021 amending Directive 2010/43/EU as regards the sustainability risks and sustainability factors to be taken into account for Undertakings for Collective Investment in Transferable Securities (UCITS)

Insurance undertakings:

Regulation (EU) 2023/2631 (referred to as the European Green Bond Regulation (EuGB-R) or the European Green Bond Standard) has been in force since the end of 2023 and applicable since 21.12.2024. Issuers may voluntarily subject themselves to the EuGB-R within the course of an issuance of green bonds and will enjoy the right to label their bond as a “European Green Bond” or “Europäische Grüne Anleihe”.

Since the private economy’s green bonds initiatives that have existed to date do not stipulate a harmonised definition of what environmentally sustainable economic activities are, it is frequently unclear for investors for which bonds the proceeds are used in accordance with the environmental objectives of the Paris Agreement, or contribute to these objectives.

For the first time, the EuGB-R contained a definition for “green bonds”, since the proceeds from the issuance of such bonds are required to be invested in accordance with the Taxonomy Regulation in a provable and measurable manner (see above). In so doing, investor protection is strengthened and Greenwashing prevented. This is primarily guaranteed by means of comprehensive disclosure obligations, reviewed by the supervisor and by independent external reviewers, who are supervised by ESMA. Furthermore, every issuance of a European Green Bond requires an approved capital market prospectus. Information documents, allocation reports and impact reports ensure comprehensive access rights for investors cross the entire term of the bond.

The observance of these disclosure obligations in Austria is subject to supervision by the FMA.

More detailed information about establishing contact and notification of documents in relation to the European Green Bond Standard can be found on the  FMA web page “European Green Bond Standard”.

On 13 June 2024, Directive (EU) 2024/1760 on corporate sustainability due diligence (“Corporate Sustainability Due Diligence Directive” (CSDDD)) was published in the Official Journal of the European Union, which stipulates entities and upstream or downstream business partners (including suppliers, production and distribution) are obliged to prevent, end or reduce negative impacts on human rights and the environment. In addition, it also includes, inter alia, the obligation to integrate risk-based due diligence in policies and risk management systems and assumptions in line with transition plans. Regulated financial entities are also included, with the exception of alternative investment funds (AIFs) and undertakings for collective investment in transferable securities (UCITS) and only with regard to upstream business partners.

There will be a phased-in application for entities in scope from 2027, with there also being exemptions regarding information obligations for entities in scope of Articles 19a, 29a or 40a of the Balance Sheet Directive in relation to sustainability reporting or transition plans. In April 2025, Directive (EU) 2025/794 of the European Parliament and of the Council amending Directive (EU) 2022/2464 and (EU) 2024/1760 amending Directives (EU) 2022/2464 and (EU) 2024/1760 as regards the dates from which Member States are to apply certain corporate sustainability reporting and due diligence requirements was adopted, with applicability being temporarily postponed for certain types of entities.

Regulation (EU) 2024/3005 on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities, and amending Regulations (EU) 2019/2088 and (EU) 2023/2859 (the ESG Rating Regulation) was published on 12.12.2024 in the Official Journal of the EU, which regulations ESG rating activities and which also contains provision on the disclosures of ESG ratings agencies regarding the assessment of risks, that is applicable from 02.07.2026.

Under the ESG Rating Regulation, para. 3 is added to Article 13 SFDR, in accordance with which a financial market participant or a financial adviser that issues and discloses to third parties an ESG rating, as defined in Article 3, point (1) of the ESG Rating Regulation shall be required to include on its website the same information as that required by point 1 of Annex III to the ESG Rating Regulation and it shall make a link available to the website disclosures in marketing communications. The ESAs are drawing up Regulatory Technical Standards about this issue.