On 25 May 2022, the European Supervisory Authorities ("ESAs") published the European Commission's ("Commission") responses to their questions related to the implementation of the Sustainable Finance Disclosure Regulation ("SFDR") and Taxonomy Regulation.
The Commission's statements in relation to: the consideration of principal adverse impacts at product level; what brings Article 8 SFDR funds within scope of the Taxonomy Regulation disclosure requirements and the nature of those disclosures; and good governance practices of investee companies, will be of particular interest to fund management companies.
This was followed by further guidance from the European Securities and Markets Authority ("ESMA") on 31 May 2022, in the form of a supervisory briefing on sustainability risks and disclosures in the area of investment management (the "Supervisory Briefing"). The Supervisory Briefing is directed at national competent authorities ("NCAs"), but will be informative for fund managers as regards the supervisory expectations in relation to the implementation of the SFDR and Taxonomy Regulation requirements. On 2 June 2022, the ESAs published a further statement titled "Clarifications on the ESAs' draft RTS under SFDR", which follows numerous requests for clarifications from stakeholders and NCAs on the level 2 regulatory technical standards ("RTS") under the SFDR, due to apply from 1 January 2023.
We have prepared a briefing note highlighting the key points made in both the Commission's Q&A and the Supervisory Briefing.