SFDR: Regulatory Technical Standards: disharmonious delay?

Whilst to date no formal announcement has been made by the European Commission, in a letter to two trade associations (the German Bundesverband Investment und Asset Management (BVI) and the Italian Assogestioni) the Commission states that the Level 2 regulatory technical standards (RTS) for the Sustainable Finance Disclosure Regulation (SFDR) will no longer apply from March 10, 2021 and, instead, will become applicable “at a later date”. While this later date has not been specified, there is some expectation that this is likely to be closer to January 1, 2022, the date that the Taxonomy Regulation goes into effect. In the letter the Commission makes clear that, regardless of the RTS being pushed back, all of the requirements and general principles contained in SFDR itself will be applicable to firms from March 10, 2021.

Given that the purpose of the RTS is to provide further detail and guidance to ensure that firms take the harmonized approach that will be requisite to the SFDR meeting its stated objectives, the delay of the RTS is counterintuitive. From a practical perspective, the position now seems to be that firms will have to use their best judgements when implementing the various disclosure requirements contained in SFDR, which practically speaking will require taking into account to some degree the content of the draft RTS. This approach will have to be taken with the understanding that any decisions made now are going to have to be reconsidered in light of the final text of the RTS once it is published, meaning that any disclosure made may subsequently need to be revised.