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ESG and Sustainable Investments: House of Lords EU Committee Queries Taxonomy Regulation With HMT

On January 16, the House of Lords European Union Committee published a letter from the Chair, Lord Kinnoull, to John Glen, Economic Secretary to Her Majesty’s Treasury (the Letter). The Letter concerns the recently published Taxonomy Regulation (for more information please see the January 10 edition of Corporate & Financial Weekly Digest).

In the Letter, Lord Kinnoull raises a number of questions regarding the Taxonomy Regulation. While some questions are procedural, most of the questions concern the interaction between the new regulation and Brexit.

One of Lord Kinnoull’s questions is whether, post-Brexit, the UK Government will seek to align legislation produced in response to their Green Finance Strategy (available here) with the EU legislation produced in response to European Commission’s (the Commission) Sustainable Finance Action Plan. The Taxonomy Regulation is one such piece of legislation.

Lord Kinnoull also observes that the Taxonomy Regulation represents a compromise between EU Member States regarding nuclear energy. Some Member States were in favor of designating nuclear energy as an “environmentally sustainable economic activity,” but other countries did not support this view. Instead, nuclear energy is not mentioned in the Taxonomy Regulation but is expected to be designated a “transition activity” (i.e., an activity which supports the transition to a climate-neutral economy).

In the Letter, Lord Kinnoull notes, “the importance the [UK] Government attaches to the nuclear energy industry,” and queries whether the UK Government intends to follow the EU’s lead in this regard.

Finally, Lord Kinnoull turns to the Platform on Sustainable Finance. This group — to be chaired by the Commission and include scientists, policy-makers and private-sector stakeholders — will advise and assist the Commission in developing the delegated acts required by the Taxonomy Regulation. Lord Kinnoull queries whether the “proposed composition of the Platform . . . will allow the UK to maintain influence over the formulation” of the delegated acts following Brexit.

The Letter is available here.

©2020 Katten Muchin Rosenman LLP

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John Ahern, Financial Attorney, London, Katten Law Firm
Partner

John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

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Carolyn H. Jackson, International Attorney, Katten Muchin law firm
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Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws and regulations. 

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Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
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Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

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Neil Robson, private equity fund managers counselor, Katten Law Firm, London
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Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...

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