EU: Delay to Finalised RTS Generates SFDR Uncertainty

Asset managers had hoped that finalised regulatory technical standards for Level 2 SFDR reporting would be available to assist preparations for Level 1 compliance.

Advice to asset managers from European supervisors to utilise draft guidance to comply with Level 1 of the Sustainable Finance Disclosure Regulation (SFDR) will cause additional uncertainty to their preparations, lawyers have warned.

SFDR requires asset managers to provide detailed information to customers to justify marketing their investment solutions as ‘green’. Under Level 1, which starts March 10, they must supply periodic reporting, augmented by more detailed underlying data during Level 2, which is intended to commence next year.

The details for Level 2 information were expected to be finalised in regulatory technical standards (RTS) early in Q1 2021. But criticism of the draft RTSs in January 2021 led the European Supervisory Authorities (ESAs) to submit revised drafts in early February, which will take the European Commission no less than three months to approve.

Asset managers had been hoping that finalised RTSs for Level 2 would be available to assist in their final preparations for compliance with SFDR’s Level 1 requirements.

Supervisory guidance issued last week by the ESAs – that asset managers should simply use existing draft RTSs – has been described as “unhelpful” by Linklaters… [continues]

Read the full article on Regulation Asia’s sister publication, ESG Investor.

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