SFDR Level 1 compliance sustainAX

Regulation – WE DID IT! The 10/3 deadline of the SFDR Level 1 is history!

Late yesterday night we finished the work to ensure compliance with the SFDR Level 1 for our clients, including the big ones.

The steps in this SFDR Level 1 process:

  1. Ensure that the SFDR Level 1 and the end target of EU, the climate 2050 goals, are understood in the organisation.
  2. Identify the products in scope (one client also has Norwegian funds for local clients and the EEA/Norwegian implementation is not yet acted).
  3. Produce the relevant texts; 
    • Art 3 (entity – how do yo integrate ESG risks), 
    • Art 4 (entity – how do you deal with Principal Adverse Impact) , 
    • Art 5 (entity – how is sustainability included in the remuneration policy),
    • Art 6 (product – how is ESG risks integrated in the investment process), 
    • Art 8 (product – if promotion of E and S characteristics, explain how) and 
    • Art 9 (product – if sustainability target , explain how). 
    • Adding short versions and long versions (Art 10), some special products and multi language version, it got into a library of texts to keep well organised.
  4. Coordinate the inclusion of all these texts in prospectuses and web pages to ensure the right texts ended in the right places.

Why did we finish so late? Well, like all of us, we were waiting in vain for clarification from the EU on some of the most debated points. See some thoughts about this here. 

Anyway, today is 11/3, puh, and we’re now looking the SFDR Level 2 or RTS in the eyes! 

In front of us we have quite some work. This starts with some long evenings to digest (2nd time reading for us) the core 100 pagers of the text (200 if you include the comments and answers from the ESAs on the input from the hearings).

SFDR Level 1 Conclusion:

EU is very serious about their demand for strong transparency, it will be impossible to pretend being sustainable as an investor from now. 

What is very interesting is that we saw products changing their investment policy throughout this process both on ESG risk integration and E and S strategies. Exactly as EU is targeting…

If you feel uncertain about this field, give us a call and we can do a short brief. And who knows, maybe we can do some mutually beneficial business together!