Consultation on draft RTS for ESG disclosures

European Supervisory Authorities (ESAs) have jointly published a consultation paper setting out the proposed regulatory technical standards (RTS) on sustainability related disclosures under the Sustainable Finance Disclosure Regulation (the Disclosures Regulation).

The timetable for implementation is tight: the consultation closes on 1 September 2020 and the ESAs are required to submit all but one of the RTS to the Commission by 30 December 2020. The remaining RTS, in relation to sustainability indicators in relation to adverse impacts in the field of social and employee matters, respect for human rights, anti-corruption and anti-bribery matters (Disclosures Regulation Article 4(7)), must be submitted by 31 December 2021. The Disclosures Regulation generally will apply from 10 March 2021.

The Disclosures Regulation imposes new disclosure obligations on asset managers and financial advisers in respect of sustainability, to make it easier for end-investors to make informed investment choices. The draft RTS includes a mandatory reporting template, a set of indicators for ESG adverse impacts and details of the content and presentation of required disclosures. The mandatory template and adverse impact indicators will increase transparency and allow investors to compare different products, reducing the possibility of “greenwashing”. However the scope of information that it is proposed managers take into account is extensive and there is a concern that the information required is simply not available at a sufficiently granular level.

We will make available a more detailed run-down of the consultation paper shortly. Our detailed summary of the obligations under the Disclosures Regulation: Disclosures Regulation – Key Requirements will be reviewed in light of the consultation paper.