Legal Updates

Key Points to Note:

• The European Commission has adopted a Commission Delegated Regulation under the SFDR

• The Commission Delegated Regulation sets down disclosure obligations relevant to Article 8 Funds and Article 9 Funds as well as to those financial market participants publishing PAI reports under Article 4 of the SFDR

Earlier today, the European Commission adopted and published the eagerly-awaited regulatory technical standards under the SFDR (Commission Delegated Regulation). This follows a significant body of drafting work carried out by the European Supervisory Authorities (ESAs) in the course of 2021 which culminated in the publication of two reports containing draft regulatory technical standards under the SFDR in February 2021¹ and subsequently in October 2021².

The Commission Delegated Regulation published today comprises of the following:

(i) The Commission Delegated Regulation itself;
(ii) Annex I thereto which contains the template principal adverse sustainability impacts statement which must be used by financial market participants who are required or choose to report on their consideration of principal adverse impacts of investment decisions on sustainability factors under Article 4 of the SFDR³;
(iii) Annex II thereto which contains the template annex which must be appended to the pre-contractual document of all funds falling within the scope of Article 8 of the SFDR (Article 8 Funds);
(iv) Annex III thereto which contains the template annex which must be appended to the pre-contractual document of all funds falling within the scope of Article 9 of the SFDR (Article 9 Funds) and, where relevant, Article 5 of the Taxonomy Regulation4;
(v) Annex IV thereto which contains the template annex which must be appended to the annual report of all Article 8 Funds; and
(vi) Annex V thereto which contains the template annex which must be appended to the annual report of all Article 9 Funds.

The Commission Delegated Regulation also incorporates all of the required “Level 2” disclosure obligations imposed on Article 8 Funds and Article 9 Funds which fall within the scope of Article 5 or Article 6 of the Taxonomy Regulation. While the Commission Delegated Regulation will now be subject to scrutiny by the European Parliament and the Council, its publication will be welcomed by industry participants who can now progress their implementation projects to comply with the Commission Delegated Regulation by its effective date of 1 January 2023.

If you have any questions relating to this briefing, please get in touch with your usual Dillon Eustace contact.

1 Available from https://www.esma.europa.eu/sit...
2 Available from https://www.esma.europa.eu/sites/default/files/library/jc_2021_50_-_final_report_on_taxonomy-related_product_disclosure_rts.pdf
3 Regulation (EU) 2019/2088
4 Regulation (EU) 2020/852

Dillon Eustace LLP

6 April 2022