SFDR: Commission delays Level 2 RTS to 1 July 2022 (an update)

Following our earlier article of this morning, several trade bodies have now circulated a copy of the Commission's letter of 8 July 2021, sent to the Chair of the European Parliament's ECON Committee and the president of the Council of the EU's Ecofin Council.

What does the Commission say?

In it, the Commission noted:

• it had not been able to adopt the RTS (see below) submitted on 4 February 2021 by the European Supervisory Authorities (ESAs) within the usual three month period because of their 'length and technical detail', while
• six further RTS which the ESAs are currently developing (see below) - some of which amend the RTS submitted in February - were not submitted to the Commission by the original deadline of 1 June 2021.

As a result, the Commission intends to:

• 'work intensively' to adopt the six further RTS referred to above as soon as possible once they are submitted;
• incorporate all 13 of the above RTS into a single delegated act; and
• put back the date of application of the Level 2 measures by six months, from 1 January to 1 July 2022.

What do the RTS concerned cover?

The RTS submitted in February 2021 supplement the Level 1 text in respect of disclosures in relation to:

• the 'do no significant harm' principle (Article 2a(3));
• adverse sustainability impacts (entity level) - climate and other environment-related matters (Article 4(6));
• adverse sustainability impacts (entity level) - social and employee, human rights, anti-corruption and anti-bribery matters (Article 4(7));
• pre-contract disclosures for Article 8 products - promotion of environmental or social characteristics (Article 8(3));
• pre-contract disclosures for Article 9 products - promotion of sustainable investments (Article 9(5));
• website disclosures - promotion of environmental or social characteristics and sustainable investments (Article 10(2)); and
• periodic reports - promotion of environmental or social characteristics and sustainable investments (Article 11(4)).

The remaining RTS being developed cover disclosures in relation to:

• pre-contract disclosures for Article 8 products - promotion of environmental or social characteristics (Article 8(4));
• pre-contract disclosures for Article 9 products - promotion of sustainable investments (Article 9(6)); and
• periodic reports - periodic reports - promotion of environmental or social characteristics and sustainable investments (Article 11(5).

For further information as to what each of the RTS referred to above covers, please see our SFDR Tracker (in particular, Table (b) in the Annex).