1. Sustainable Finance: all hands on deck
“The timeline for the application of the new sustainable finance requirements is very challenging for companies …as long as the different sets of legislation are in different stages of development and not yet fully aligned with one another, full compliance across the investment chain will be very difficult”.
ESMA Securities and Markets Stakeholders Group (SMSG), 23 December 2020
The Sustainable Finance Disclosure Regulation (SFDR) legal application is approaching, with anticipation that the European Securities and Markets Authority (ESMA) will shortly issue general (level 1) expectations as of 10 March 2021. This follows previous varying updates from European regulators, including “fast-track” means to administer prospectus updates recently announced by the Luxembourg CSSF and the Central Bank of Ireland.
Later this year, ESMA will complete their delayed SFDR (level 2) technical standards to legally apply from January 2022. These will include a finalised Principal Adverse Impact statement and pre-contractual disclosure templates for products that either promote environmental / social characteristics or pursue sustainability objectives.
Separately, ESMA will also finalise proposals for additional Taxonomy Regulation (TR) disclosure, including Key Performance Indicators to highlight sustainable proportions of Turnover, Capital Expenditure and Operating Expenditure.
In the meantime, firms need to be notified when exactly delegated acts to the UCITS, AIFM and MiFID II directives will require the integration of sustainability risk factors into general corporate practice.
FinDatEx (including Kneip as a member) are currently consulting on a proposed interim version of their European MiFID Template (EMT) to “answer the demand of distributors and producers to cope with the basic implementation of MiFID ESG/SFDR principles”.