On September 30, 2022, the ESAs (EBA, EIOPA and ESMA) delivered to the European Commission (EC) their Final Report with draft Regulatory Technical Standards (RTS) under the Sustainable Finance Disclosure Regulation (SFDR).
Тhe ESAs propose to add specific disclosures for investments in taxonomy-aligned gas and nuclear economic activities. These disclosures are in line with the definitions in the Complementary Climate Delegated Act and will help investors make informed decisions.
The amendments should cover pre-contractual disclosures (according to Article 6 SFDR), periodic disclosures (according to Article 11(2) SFDR) and the product disclosures to be made on websites referred to in Article 10(1) SFDR, for financial products referred to in Article 8(1) to (2a) SFDR and in Article 9(1) to (4a) SFDR. The explanation of the following two articles are extended: Article 15 SFDR and Article 55 SFDR.
The changes include:
- A yes/no question to identify that a product intends to invest in gas and/or nuclear taxonomy-aligned activities.
- If the product intends to invest in such activities, the graphical representation will require the identification of the relevant proportions as shown in the screenshot below. If the product does not intend to invest in such activities, such breakdowns are not required and the existing graphical representations from the already published version of Commission Delegated Regulation (EU) 2022/1288 should be used instead.
- A footnote was added to the yes/no question to provide an indication of certain conditions under which such activities are aligned with the EU taxonomy. Analogue changes are inserted in the templates for periodic disclosures as well.
Screenshot from Annex I – template for pre-contractual disclosure for Art. 8 products:
- Further changes include minor technical revisions to the Delegated Regulation to correct inconsistencies observed after its publication.
The EC will scrutinise the draft RTS and endorse them within three months of their publication. Due to the urgency of the matter and the challenging application timeline of the Complementary Climate Delegated Act (CDA), the ESAs have left it to the EC to include an expected application date when they endorse the draft RTS.
Entry into force and application The European Commission’s CDA is set to apply from 1 January 2023.Considering the regulatory deadlines for the adoption by the European Commission and the scrutiny period by the European Parliament and Council, the issue of whether the SFDR Delegated Regulation containing the amendments would be applicable from 1 January 2023 is beyond the ESAs’ control. For this reason and bearing in mind the time available for financial market participants if the disclosures would become applicable from 1 January 2023, the ESAs have left it to the Commission to include the expected application date in the SFDR Delegated Regulation.
Impact on cleversoft Services: Once the suggested amendments are adopted, cleversoft will adapt the templates in its SFDR Service for pre-contractual, periodic documents and web disclosures accordingly as part of its compliance commitment to its customers. cleversoft will closely monitor response of the EC and the exact date of application and keep you informed.