Update on BaFin’s guidelines for German ESG funds

On 2 August 2021, the German Federal Financial Supervisory Authority (BaFin) published a consultation paper seeking views on its draft guidelines for sustainable funds (Guidelines). The consultation paper is available in German only. Our detailed client note on the primary feature of the Guidelines can be found here.

During BaFin’s annual press conference on 3 May 2022, BaFin president Marc Branson announced that, against the backdrop of the dynamic regulatory, energy and geopolitical situation, BaFin decided to put the planned guidelines for sustainable investment funds on hold. According to Marc Branson, BaFin will however, apply certain principles in its administrative practice that it set out in the consultation. The full speech can be found here.

Currently, it is unclear which requirements - set forth in the Guidelines - BaFin will apply in its administrative practice to prevent greenwashing. We expect that the industry will take a critical stance on BaFin's decision to ensure legal certainty going forward.

Simmons & Simmons is closely monitoring the legal developments on ESG at a European and national level. For more information, please visit our microsite on Sustainable Finance and ESG Investment.