SFDR Creates Uncertainty In Reporting Cross-Border Activities
The European Supervisory Authorities (the “ESAs”) have published a joint consultation (the “Consultation Paper”) on the proposed regulatory technical standards (“RTS”) under Regulation (EU) 2019/2088 sustainability‐related disclosures in the financial services sector (the “Sustainable Finance Disclosure Regulation” or the “SFDR”).
The SFDR sets out the general outline of the sustainability-related disclosure obligations for asset managers and mandates the ESAs to develop RTS providing more granular specifics with regard to the content, methodologies and presentation of some of the disclosures.
The Financial Markets Law Committee has submitted a response drawing attention to the divergence in relation to international standards on sustainability-related disclosure requirements, which creates uncertainty in relation to reporting obligations vis-à-vis cross-border investment activities. There is also some divergence across EU law in relation to disclosure obligations set out under the SFDR, the Non-Financial Reporting Directive and the Taxonomy Regulation.
The FMLC has therefore urged the ESAs to ensure that the RTS are aligned closely to the objectives set out in the SFDR. In the future, when the E.U. legislation in this area is reviewed, it would be beneficial for the objectives and requirements imposed on financial markets participants by each piece of legislation to be aligned with the others.
The letter submitted by the FMLC together with the response form can be downloaded here.
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