The EU Action Plan on Sustainable Finance is constantly evolving with consequences to asset managers globally. Regulation (EU) 2019/2088 (link) which is known as the Sustainable Finance Disclosure Regulations (SFDR) lays down sustainability-related disclosure obligations towards end investors for companies in the financial services sector
The SFDR started applying in March 2021 and requires financial market participants and financial advisers to disclose how they integrate sustainability risks and principal adverse impacts in their processes at both entity and product levels. It also introduces additional product disclosures for financial products making sustainability claims.
What are Regulatory Technical Standards?
The SFDR empowers European Supervisory Authorities ("ESAs") such as the EBA, EIOPA or ESMA, to develop Regulatory Technical Standards ("RTS") which define the requirements of the SFDR in greater detail.
The ESAs use a Joint Committee (JC) to oversee and develop consultations, reviews, draft and final RTS documents on topics such as the content, methodology and presentation of ESG disclosures both at entity level and at product level. An evolution of some of the key reports and regulations are outlined below:
Report on draft RTS - 2 Feb 2021
The Joint Committee (JC 2021 03) issued a final report on the draft RTS (link) looking at the content, methodologies and presentation of disclosures for SFDR.
Report on draft RTS - 22 Oct 2021
The Commission issued a final report on the draft RTS towards the end of Oct 2021 (link). This report (JC 2021 50) contains proposed pre-contractual and periodic reports as well as draft wording for the RTS.
Legislated RTS - 6 April 2022
The Commission issued the RTS in the form of Commission Delegated Regulation (EU) 2022/1288 (link) covering the concept or DNSH. The RTS entered force on 14 August 2022 and has been applicable since 1 January 2023.
Report on draft RTS - 30 Sept 2022
Final Report on SFDR amendments for nuclear and gas activities (link)
Legislated RTS - 31 October 2022
The RTS are continually being updated, with the most recent amendments, as at October 2022, found in Commission Delegated Regulations (EU) 2023/363 which are applicable with no transition period for implementation (link). This legislation covers more detailed guidance on pre-contractual and periodic disclosure.
Review of SFDR PAIs - 12 April 2023
Typically there will be consultations, such as the joint consultation paper (JC 2023 09) in April 2023 on PAIs and financial product disclosures (link).
Final report on draft RTS - 04 Dec 2023
Updated guidance on RTS from the Joint Committee covering proposals around: a dasboard for product information, inclusion of additional social PAIs and removal of UN GP compliance (link).
ESMA library
The ESMA hosts a library of documentation where RTS information can be found : here.
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