ESG – new Simmons client note on the SFDR RTS

As we’ve previously reported, on 6 April 2022, the European Commission published its proposed Level 2 Regulatory Technical Standards (RTS) under both the EU Sustainable Finance Disclosures Regulation (SFDR) and the EU Taxonomy Regulation (the Taxonomy). The RTS were accompanied by five draft annexes, which provide mandatory disclosure templates.

Simmons client note on the Ten Top Talking Points from the SFDR RTS

Our detailed client note can be found here.

In it, we consider what changes the Commission’s proposed RTS make to the draft versions developed by the European Supervisory Authorities in April 2020, February 2021 and October 2021 in respect of the following key issues:

• how to define an article 8 or an article 9 product
• the meaning of “sustainable investment” under SFDR
• pre-contractual disclosure for article 8 / 9 products
• taxonomy disclosure for article 8 / 9 products
• website disclosure for article 8 / 9 products
• periodic disclosure for article 8 / 9 products
• the PAI regime – disclosure requirements
• the PAI regime – PAI indicators and metrics

What are the RTS?

The RTS are a consolidated set of technical standards, which provide additional detail on the content, methodology and presentation of certain existing disclosure requirements under SFDR and the Taxonomy Regulation.

Firms subject to these requirements will need to ensure that their existing principles-based disclosures are updated to reflect the detailed requirements of the RTS, ahead of the RTS coming into force.

When will they come into force?

The Commission is proposing that the RTS will come into effect from 1 January 2023.

The Commission’s proposals, though, must now be reviewed by the European Parliament and the Council of the EU, either of which could seek to make changes to the RTS (although further substantive changes are not expected).