Last Tuesday 2 February 2021, the Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) delivered to the European Commission, the draft Regulatory Technical Standards (RTS) under the Sustainable Finance Disclosure Regulation (SFDR).
SFDR forms part of the wider EU Renewed Sustainable Finance Action Plan, to introduce standardised reporting requirements for financial market participants. The regulation sets out product level, as well as entity level disclosure requirements with regard to the integration of sustainability risks and the consideration of adverse sustainability impacts. SFDR impacts Alternative Investment Funds (AIFs), Undertakings for the Collective Investment in Transferable Securities (UCITs) as well as investment firms and credit institutions offering portfolio management services.
The proposed RTS aims to strengthen protection for end-investors and will help to respond to investor demands for sustainable products and reduce the risk of greenwashing.
The ESAs have proposed that the RTS becomes effective from January 2022. They also advise that they plan to issue a public supervisory statement, prior to the application date of the level 1 in March 2021, to ensure consistent application across the EU.
ISLA will conduct a full review of the RTS proposal, and looks forward to discussing the changes in upcoming ESG Steering Group meetings.
The final report on the draft RTS is available here.