RTS on sustainability indicators

The information referred to in Article 6(1), first subparagraph, point (j), Article 19(1), first subparagraph, point (h), Article 51(1), point (g), and Article 66(5) of Regulation (EU) 2023/1114 to be included in the crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; white papers and on the websites of crypto-assets service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59; regards climate and other environment-related impacts of consensus mechanismsmeans the rules and procedures by which an agreement is reached, among DLT network nodes, that a transaction is validated; and is therefore closely linked. To ensure consistency, coherence and comparability of that information, it is appropriate to regulate it by way of a single Regulation.

To ensure consistency between the information found across crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; white papers issued via the same consensus mechanismmeans the rules and procedures by which an agreement is reached, among DLT network nodes, that a transaction is validated;, as well as proportionality in complying with this Regulation, it should be possible, without prejudice to the entities’ respective legal obligations, to reuse information on the consensus mechanismmeans the rules and procedures by which an agreement is reached, among DLT network nodes, that a transaction is validated; that are relevant to a crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; for which a crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; white paper is prepared, where such information has already been published in the context of another crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; white paper.

Considering that all disclosing entities remain responsible for their own disclosures, including where they source information from existing crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; white papers, information included in the white papers and information made available on the websites of crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59; should be reviewed on a regular basis and updated accordingly. Considering that disclosing entities may make use of independent third parties to obtain or verify information to be disclosed, the use of such independent third parties for those purposes should be disclosed and the relevant independent third-party identified.

To facilitate investors’ ability to compare between the adverse impacts of the consensus mechanismsmeans the rules and procedures by which an agreement is reached, among DLT network nodes, that a transaction is validated; on which are issued different crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;, the information on crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;’ websites should allow the public to compare the adverse impacts on the climate and other environment-related adverse impacts of the consensus mechanismsmeans the rules and procedures by which an agreement is reached, among DLT network nodes, that a transaction is validated; and their incentive structuresmeans the set of incentives and penalties established as part of a consensus mechanism to economically incentivise distributed ledger technology (DLT) network nodes to cooperate in applying the rules and procedures of the consensus mechanism for the purpose of validating transactions in crypto-assets; across all the crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; in relation to which the crypto-asset service providermeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59; provides crypto-asset servicesmeans any of the following services and activities relating to any crypto-asset:providing custody and administration of crypto-assets on behalf of clients;operation of a trading platform for crypto-assets;exchange of crypto-assets for funds;exchange of crypto-assets for other crypto-assets;execution of orders for crypto-assets on behalf of clients;placing of crypto-assets;reception and transmission of orders for crypto-assets on behalf of clients;providing advice on crypto-assets;providing portfolio management on crypto-assets;providing transfer services for crypto-assets on behalf of clients;.

To assess the impact of the consensus mechanismmeans the rules and procedures by which an agreement is reached, among DLT network nodes, that a transaction is validated; used to issue each crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; on the climate and other environment-related impacts, it is appropriate to take into account both the validation of each transaction in the relevant crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;, taking into account the DLT network nodesmeans a device or process that is part of a network and that holds a complete or partial replica of records of all transactions on a distributed ledger; actively involved in the validation, and the maintenance of the integrity of a DLT by all DLT network nodesmeans a device or process that is part of a network and that holds a complete or partial replica of records of all transactions on a distributed ledger;.

Key indicators should be used to easily understand the impacts on climate and other environment-related impacts of the consensus mechanismsmeans the rules and procedures by which an agreement is reached, among DLT network nodes, that a transaction is validated;. To incentivise the use of more climate and environmentally friendly consensus mechanismsmeans the rules and procedures by which an agreement is reached, among DLT network nodes, that a transaction is validated; and to prevent greenwashing practices, it is crucial to rely to the extent possible on quantitative metrics. Quantitative metrics should display gross energy consumption and emissions, without reflecting potential off-setting mechanisms.

Annual energy consumption should be used as the key mandatory indicator because it is considered to be the most conducive to investor awareness of the impact of consensus mechanismsmeans the rules and procedures by which an agreement is reached, among DLT network nodes, that a transaction is validated;. Considering the key role of electricity in the operation of DLT networks, electricity consumption should be considered a suitable proxy for energy consumption.

In order to ensure a proportionate approach to sustainability information, it is appropriate to require additional information with regard to consensus mechanismsmeans the rules and procedures by which an agreement is reached, among DLT network nodes, that a transaction is validated; with more significant climate and other environment-related adverse impacts, especially where they exceed a certain level of energy consumption. Therefore, supplementary key indicators on energy and greenhouse gas (GHG) emissions should be used for crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; issued via consensus mechanismsmeans the rules and procedures by which an agreement is reached, among DLT network nodes, that a transaction is validated; with higher levels of yearly energy consumption in order to deepen investors’ understanding on the adverse impacts of such consensus mechanismsmeans the rules and procedures by which an agreement is reached, among DLT network nodes, that a transaction is validated;.

In addition to mandatory and supplementary key indicators, it should be possible to voluntarily include, in a specific part of the white papers or the websites of crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;, information on climate and other environment-related indicatorsmeans the indicators listed in the section ‘Mandatory key indicator on energy consumption’ of Table 2 of the Annex, in the section ‘Supplementary key indicators on energy and GHG emissions’ of Table 3 of the Annex, and in the section ‘Optional indicators’ of Table 4 of the Annex; that may be more complex to assess or for which it may be more difficult to find relevant data, for instance in relation to wastemeans waste as defined in Article 2, point (23), of Directive (EU) 2018/2001; production and the use of natural resourcesmeans natural resources as defined in Table 2 of Annex II to the Delegated Regulation (EU) 2023/2772., such as water.

To prevent greenwashing and to ensure the comparability of information to be included in the crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; white papers and on the websites of crypto-assets service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;, information regarding optional indicators should be subject to the same harmonised rules on the presentation of information and on the methodologies as the information regarding mandatory and supplementary indicators. This applies, for instance, to indirect GHG emissions, such as upstream emissions linked to the equipment purchased by the DLT network nodesmeans a device or process that is part of a network and that holds a complete or partial replica of records of all transactions on a distributed ledger; or downstream emissions related to wastemeans waste as defined in Article 2, point (23), of Directive (EU) 2018/2001; management.

In order to foster consistency of disclosed information in the absence of consensus on a specific set of reliable methodologies to calculate the identified indicators at this stage, harmonised principles should nonetheless apply to ensure the comparability of disclosed information, avoid any methodological bias, and ensure the consistency of methodologies used with those referred to in the framework of the application of Directive (EU) 2022/2464 of the European Parliament and of the Council(²)Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting (OJ L 322, 16.12.2022, p. 15, ELI: http://data.europa.eu/eli/dir/2022/2464/oj).. As a result, information on energy consumption and GHG emissions should be aligned with the calculation guidance laid down in Commission Delegated Regulation (EU) 2023/2772(³)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 (OJ L, 2023/2772, 22.12.2023, ELI: http://data.europa.eu/eli/reg_del/2023/2772/oj)., while the methodology used to calculate each quantitative metric and any deviations from this calculation guidance should be disclosed.

Where information related to indicators is not available in a reasonable timeframe, estimates should be disclosed together with reasonable assumptions used to calculate such estimates and with details of the best efforts used to obtain the information. Therefore, where the location of nodes cannot be identified as needed for certain disclosures, local, regional or global data should be used as necessary and appropriate. This data should be disclosed together with details on the best efforts used to obtain the information.

This Regulation is based on the draft regulatory technical standards submitted to the Commission by the European Securities and Markets Authority (‘ESMA’), in cooperation with the European Banking Authority.

ESMA has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the advice of the Securities and Markets Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council(⁴)Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84, ELI: http://data.europa.eu/eli/reg/2010/1095/oj).,