Sustainable Finance Disclosure Regulation (“SFDR”) requires Financial Market Participants and Financial Advisers to publish ESG-related information on their websites and marketing material from March 10th onwards. What does this mean in practice?
Sustainability Risk – Environmental, Social or Governance (ESG) event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.
Sustainability Factor – Environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.
Adverse Sustainability Impact – Adverse impacts of investment decisions on sustainability factors.
Financial Market Participant – Investment firms and credit institutions which provide portfolio management, AIF/EuSEF/EuVECA/UCITS managers, insurance undertakings which make available an insurance‐based investment product (IBIP), manufacturers of a pension product, Pan‐European personal pension product (PEPP) providers, institutions for occupational retirement provision (IORP).
Financial Adviser – Investment firms, credit institutions and AIF/UCITS managers which provide investment advice as well as insurance intermediaries and insurance undertakings which provide insurance advice.
Financial Market Participants and Financial Advisers need to publish on their websites the following information:
Furthermore, Financial Market Participants' and Financial Advisers' pre‐contractual disclosures, including the marketing material, should contain the following information (using “comply or explain” approach):
SFDR contains also other obligations which will be applied at the later stage. We will introduce them in a separate blog post.
On February 4th the Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) published the final report and draft Regulatory Technical Standard (“RTS”) on disclosures under SFDR complementing and specifying the provisions of SFDR. The European Commission is expected to endorse the RTS within three months of their publication.
The ESAs state that while Financial Market Participants and Financial Advisers are required to apply most of the provisions on sustainability-related disclosures from March 10th, the application of the RTS will be delayed to a later date according to the EC letter to the ESAs. The ESAs have proposed that the application date of the RTS should be January 1st 2022.