EU Commission adopts RTS under the SFDR

Summary

On 6 April 2022, the European Commission announced that it has adopted the regulatory technical standards to be used by financial market participants when disclosing sustainability-related information under the Sustainable Finance Disclosures Regulation (SFDR).¹

Background

The SFDR mandated the ESAs² to develop draft regulatory technical standards (RTS) to further specify the content, methodologies and presentation of information to be provided pursuant to various provisions of the SFDR.

The ESAs previously submitted draft RTS to the EU Commission in April 2020 and February 2021, and final draft RTS were submitted in October 2021.³ In a letter dated 8 July 2021,⁴ the ESAs stated their intention was to “bundle all 13 of the regulatory technical standards in a single delegated act”. The delegated act published by the EU Commission on 6 April 2022 comprises all the various RTS required under the SFDR.

Adopted RTS

The RTS include:

• the main text of the delegated act that includes all 13 RTS, together with an explanatory memorandum;
• Annex 1 - template principal adverse sustainability impacts statement;
• Annex 2 and Annex 3 - template pre-contractual disclosure documents for Article 8 and Article 9 financial products; and
• Annex 4 and Annex 5 that are, respectively, the template periodic disclosure documents for Article 8 and Article 9 financial products.

Next steps and date of application

The RTS will now be subject to scrutiny by the European Parliament and the Council. When the final text is agreed, the RTS will be published in the Official Journal of the EU. The date of application of the RTS has been subject to numerous delays.⁵ The adopted RTS state that they are scheduled to apply from 1 January 2023, but their application date will not be definitive until confirmed by the European Parliament and the Council. The current expectation is that 1 January 2023 will be the effective date.

Dechert’s EU ESG team is currently reviewing the content of the RTS and analysing the differences between the April 2022 version of the RTS and the previous drafts of the RTS published in February and October 2021.This detailed analysis, together with a comprehensive summary of what the RTS mean for financial market participants, will be published shortly.

Footnotes

1) Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector, as amended by Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment (Taxonomy Regulation).
2) The European Insurance and Occupational Pensions Authority, the European Securities and Markets Authority and the European Banking Authority.
3) See our OnPoint on the final draft RTS, available here.
4) The ESMA letter is available here.
5) See our OnPoint on the delays to the application of the RTS, available here.