The Commission de Surveillance du Secteur Financier (CSSF) has published a circular on the Supervisory Statement of the Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA – hereinafter referred to as “ESAs”) on the application of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (“SFDR”) within the period from 10 March 2021 to the application date of the Regulatory Technical Standards (“RTS”) on the content, methodologies and presentation of sustainability-related disclosures. The Supervisory Statement has been published on 25 February 2021.
SFDR Areas of Uncertainty
The CSSF awaits the answer from the European Commission to the letter published by the ESAs on 7 January 2021 in respect of a number of several important areas of uncertainty in the interpretation of the SFDR. These “Priority issues relating to SFDR application” cover:
- the application of SFDR to non-EU Alternative Investment Fund Managers (AIFMs) and registered AIFMs;
- the application of the 500-employee threshold for principal adverse impact reporting on parent undertakings of a large group;
- the meaning of “promotion” in the context of products promoting environmental or social characteristics;
- the application of Article 9 of SFDR; and
- the application of SFDR product rules to portfolios and dedicated funds.
The ESA’s warned that “draft RTS must still be adopted by the European Commission and that the European Parliament or the Council may object to the draft RTS within a period of three months from the date of notification of the RTS adopted by the Commission. Therefore, the final RTS may be different to the draft RTS in the ESAs’ final report”.
Nevertheless, the CSSF recommends financial market participants and financial advisers to use the interim period from 10 March 2021 until 1 January 2022 to prepare for the application of the RTS.
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