ESG@Linklaters – Monthly update from Germany – 5 August 2021

Each edition of our series “ESG@Linklaters – Our monthly update from Germany” covers key topics on current ESG aspects in Germany, the EU and globally. In a legal area in which we are confronted with a fast growing number of laws, acts, guidelines, reports, proposals and announcements, this newsletter aims to provide you with an overview of the latest ESG developments and help you navigating the rapidly changing ESG landscape.

In a nutshell

Hear from Christian Storck, Partner, Capital Markets, about the key issues covered in our August edition.


Business & Human Rights

ESG@Linklaters: Podcast on the new German Supply Chain Due Diligence Act

As reported in our July newsletter, Germany has adopted a new mandatory Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz). With the new law, the German legislator has set binding requirements that in-scope companies will have to fulfil as of January 2023. In the first episode of our brand-new ESG podcast series, we provide an overview of the new obligations and discuss the consequences and practical challenges for businesses. Further information on the new German law can be found in our client alert.


The following material may help to prepare for what is coming, also with a view to other jurisdictions:



Climate Change & Environment

EU: “Fit for 55” package

On 14 July 2021, the EU Commission published the much-anticipated, so called
“Fit for 55” package, with a number of legislative and policy proposals to enable the EU to meet its new 2030 target – i.e. a package that is “fit for” delivering a 55% Greenhouse gas emission reduction by 2030. What is being proposed will involve very significant changes for all sectors, in particular the energy, transport and buildings sectors.


For more information, see our blog posts which can also be found on our “Fit for 55” microsite:


EU: Climate law published in Official Journal

The EU Climate Law (Regulation (EU) 2021/1119 of 30 June 2021) was published in the EU Official Journal on 9 July 2021 and came into force on 29 July 2021. For more information, see our blog post.


EU: Recent climate litigation

As reported in our earlier newsletters, a number of recent landmark climate litigation decisions in the EU have affected governments and corporates. The links to our webinar and client alerts contain further information:




ESG@Linklaters: Podcast on ESG’s far-reaching consequences for the management of German companies 

Against the background of current legislation and judicial decisions as well as a changing perception of the role of companies in society, ESG issues are playing an increasing role in the daily work of the management of German companies. The growing influence of ESG criteria can be seen as both an opportunity and a risk. In the current episode of the Handelsblatt Fachmedien podcast series “FACHFRAGEN – der Podcast für Wirtschaft, Recht und Management”, our partners Claudia Schneider and Staffan Illert explain the far-reaching consequences of ESG for management. You can also find the episode on Spotify, Apple Podcast and other podcast platforms.


ESG Disclosure & Reporting

EU: Delegated Act on Article 8 disclosures under Taxonomy Regulation adopted 

The EU Taxonomy Regulation (SFTR) sets out an EU-wide framework according to which investors and businesses can assess whether certain economic activities are “environmentally sustainable”. Article 8 of the SFTR requires undertakings covered by the Non-Financial Reporting Directive to publish information on how and to what extent their activities are associated with economic activities that qualify as “environmentally sustainable” under the SFTR. In the context of a “legislative package” of 6 July 2021, the EU Commission adopted a Delegated Act setting out the content, methodology and presentation of the KPIs that non-financial and financial undertakings are required to disclose under Article 8 of the SFTR. For more information, see our publication.


Sustainable Finance

Germany: Consultation on guideline for sustainable investment funds

On 2 August 2021 the German Federal Financial Supervisory Authority (BaFin) published a draft guideline for sustainable investment funds. The guideline contains requirements on how capital management companies must structure public investment funds in the future so that they qualify as sustainable or can be marketed as explicitly sustainable. In case the fund’s sustainability objective includes a minimum quota of sustainable investment, such quota may not be lower than 75%. The fund industry now has until 6 September 2021 to comment on BaFin’s plans.


Germany: Study on current trends in sustainable lending

In a joint study focussing on the German-speaking market, Helaba and Linklaters analysed current trends in sustainable lending. They examined the documentation of approximately 100 ESG-related loans (mainly syndicated loans, including leveraged-buy-out loans, and Schuldscheindarlehen) entered into between 2016 and 2021 and summarised their findings on certain aspects such as the use of ESG ratings and KPIs, pricing systems and approaches regarding external verification. According to the study, among the latest trends in sustainable lending are (i) the establishment of sustainable finance advisory as a new service bank offer to their clients and (ii) facilities combining green and sustainability-linked elements.


EU: Commission’s Renewed Sustainable Finance Strategy published

On 6 July 2021, the EU Commission published its updated Strategy for Financing the Transition to a Sustainable Economy (“Strategy”) with over 50 significant and wide-ranging proposals aimed at greening the financial services sector and ranging from updates to current Taxonomy rules to proposals for green retail loans and mortgages. The Strategy has been accompanied by a legislative proposal for an EU green bond framework (see below) and an updated delegated act on Article 8 Taxonomy disclosures (see above).


For more information, see our publication.


EU: Proposal for the EU Green Bond Standard

In the context of its now amended sustainable finance strategy, the EU Commission has also published its long awaited legislative proposal for a regulation on EU green bonds, the ‛EU Green Bond Standard’. The proposal lays the foundation for a common framework of rules for issuers of bonds that voluntarily wish to use the designation ‛European green bond’. The designation relates to green “use of proceeds” bonds that pursue environmentally sustainable objectives under the EU Taxonomy Regulation. For more information, see our blog post.


EU: Taxonomy Regulation – current developments


In June 2021, the EU Commission formally adopted the final version of the delegated act containing the technical screening criteria for climate change mitigation and adaptation under the EU Taxonomy Regulation (see our July newsletter). A decision on natural gas and nuclear power was however delayed to a later date. For an update concerning these energy sources, see our blog post.


In addition on 12 July 2021, the Platform on Sustainable Finance (PSF) published the following draft reports on the brown and social taxonomies for consultation:


For more information, see our general blog post as well as our blog post on the discussion of linking ESG to executive pay.


EU: Disclosure Regulation - update on RTS and Q&A’s


Based on a letter by the EU Commission dated 8 July 2021, there are strong indications that the application date of the long-awaited RTS under the Sustainable Finance Disclosure Regulation (SFDR) might be deferred by six months, from
1 January 2022 to 1 July 2022. For more information, see our blog post.


Further, on 26 July 2021, the EU Commission published its long-awaited Q&A on the SFDR in response to the queries raised by the European Supervisory Authorities (ESAs, i.e. ESMA, EBA and EIOPA) in a letter to the Commission in January 2021 (see our February newsletter). For more information, see our blog post.


Global: ELFA/LMA guide to sustainability linked leveraged loans


The European Leveraged Finance Association (ELFA) together with the Loan Market Association (LMA) published a “Best Practice Guide to Sustainability Linked Leveraged Loans”. The guide seeks to provide practical guidance as to the application of the Sustainability Linked Loan Principles (SLLP) to leveraged loans and covers aspects such as the selection and disclosure of KPIs, the calibration of SPTs, questions of reporting and verification as well as documentation issues.


Earlier in July 2021, the ELFA had issued a paper on “The Emergence of ESG Provisions in Leveraged Finance Transactions” which, among other things, touches on key ESG features and trends concerning high yield bonds and leveraged loans as well as on investors’ views.