Question
Should all the instruments or lending against Sovereigns, where the use of proceeds is unknown, be excluded from the numerator of Template 7 ESG Disclosure - row 460 - Sovereigns and moved to row 440 - Other assets (e.g. Goodwill, commodities etc.)?
Background on the question
Following the Commission Notice C/2024/6691 for EU taxonomy, published on 8th of November 2024 ( Q.15: How should exposures of financial undertakings to regional governments and to entities controlled by States be treated?) , we would like to understand if the exposures related to lending or financing where the use of proceeds is unknown should be excluded from the numerator of Template 7 ESG Disclosure.
Answer
Assets on lending or financing central governments, central banks and supranational issuers by the institutions irrespective of the use of proceeds, should be excluded from both the numerator and denominator of the GAR according to Article 7(1) of the Disclosures Delegated Act. Institutions should disclose them in row 46 – Sovereigns of Template 7.