The EU SFDR – key requirements for asset managers

Introduction

The European Union (EU) has set in motion an ambitious legislative programme to make environmental, social and governance (ESG) concerns a central plank of regulation in the financial services industry.

As part of this package, the Regulation on sustainability-related disclosures in the financial services sector (the SFDR) was published in December 2019.

Simmons & Simmons’ note on the SFDR – Key requirements

This document summarises the aspects of the SFDR of most relevance to asset management firms and examines three key themes according to the likely commercial impact of the SFDR, looking in turn at the rules which apply:

• at the level of the asset management firm;
• to all financial products made available by an asset management firm;
  whether or not the product has an express ESG focus; and
• only to financial products which have an express ESG focus.

The note also summarises those elements of the draft Framework (or Taxonomy) Regulation which are directly relevant to the SFDR.

Although the large majority of the SFDR will not be implemented until March 2021, we strongly recommend that firms prioritise during 2020 to ensure that they will be ready to comply with its provisions.

Please also see our note summarising the wider EU ESG initiatives for asset managers and our Sustainable Finance and ESG hub