Survey - EU Sustainable Finance Disclosure Regulation (SFDR) - Art 4. Adverse Sustainability Impacts Statement - Who is Complying and Who is Explaining?

October 02, 2020

One of the requirements of the EU Sustainable Finance Disclosure Regulation (SFDR) that appears to be the most onerous is the preparation of an “adverse impact statement” relating to the adverse impact of investment decisions on sustainability factors at the level of the relevant Financial Market Participant (FMP).This requirement applies on a mandatory basis to FMPs (or FMPs that are the parent of a group) with 500 or more staff. For all other FMPs, it is a ‘comply’ or ‘explain’ (i.e. why they do not consider adverse impacts) provision.2

Managers who fall outside of the mandatory ‘comply’ category are concerned about making the ‘comply’ or ‘explain’ decision as this involves weighing the burden of complying with the rather involved impact statement requirements proposed under the draft Regulatory Technical Standards (RTS) against any potential reputational impact of publicly stating that they will not comply.The purpose of this survey is to gather intelligent market data regarding survey participants' current expected approach to this issue. The results of the survey will be shared on an aggregated anonymized basis with survey participants, providing we receive an adequate sample of responses. Data from each individual survey participant is maintained entirely confidentially.3

The survey takes less than five minutes and needs to be completed by 6 November 2020. 

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1) EU-based investment firms that provide portfolio management (e.g. MiFID firms), alternative investment fund managers (AIFMs) and UCITS management companies (including SMICs).

2) It is important to note that as per the current draft RTS, the preparation of an adverse impact statement may in effect be mandatory at the product level where a manager classifies a fund as a Light-Green Fund (Art.8) or a Dark-Green Fund (Art.9). The statement would be made in respect of the relevant product rather than at the level of the FMP as a whole, however.

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