ISLA: ESAs Publish Supervisory Statement on the Application of SFDR

On 7 January and ahead of the application date of the Sustainable Finance Disclosure Regulation (SFDR) on 10 March 2021, the ESAs (ESMA, EBA, EIOPA, Joint Committee of the European Supervisory Authorities) sent a letter to the European Commission requesting clarification around some of the core elements of the regulation including, but not limited to:

  • the application of SFDR to non-EU Alternative Investment Fund Managers (AIFMs) and registered AIFMs;
  • the meaning of “promotion” in the context of products promoting environmental or social characteristics; and
  • the application of Article 9 of SFDR.

The issues raised underline a number of compliance challenges that the industry faces ahead of the fast approaching deadline. As a follow up of this letter, the ESAs issued a Supervisory Statement on the 25 February, with the intention to reduce any diversion of approach between the 10 March go live, and the applicability of the draft Regulatory Technical Standards (RTS) in January 2022.

“The overall objective of this statement is to achieve an effective and consistent application and national supervision of the SFDR, promoting a level playing field and the protection of investors.’’

The ESAs advise National Competent Authorities to refer financial market participants, in the absence of further guidance, to the draft RTS final report submitted to the European Commission on 4 February, which can be used as a reference in the interim period.

All documentation including ESAs letter, the draft final Regulatory Technical Standards (RTS) report and the Supervisory Statement can be found here.

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