Yesterday, the Joint-Committee of the ESA's published the final draft of the RTS on sustainability disclosure templates for STS.
To remind everyone, the original STS rules passed in 2017 required mortgage and auto transactions to disclose sustainability information for the underlying assets but only to the extent it was available to the originator.
In the 2021 amendment, an additional but entirely optional measure provided that originators of mortgage or auto STS could, should they wish, disclose slightly different information on the "principal adverse impact of the assets financed by underlying exposures on sustainability factors".
The legislators then mandated the ESAs to set out a mandatory format for this optional disclosure.
Why the legislators felt that the right approach was to require a mandatory format for the optional disclosure but leave an optional format for the mandatory disclosure will remain, we suspect, one of those mysteries.
If, as is extremely likely, the European Commission agrees with the ESAs' text, this draft RTS should become law in the near future.
Insofar as the RTS applies only to optional disclosure, we do not anticipate this to be much of a gamechanger: either the originator can report in the mandated format and probably will or it cannot and will elect not to report.