After postponing the implementation of Sustainable Finance Disclosure Regulation (SFDR) from January 1 to June 2022, the European Commission has delayed the issuance of the ‘level 2’ regulatory technical standards (the guidelines which explain in detail which data needs to be disclosed in which format) by another six months to January 2023.
According to John Berrigan, the deputy director-general for financial stability, financial services and capital markets union at the European Commission, the delay is due to the length and technical detail of the regulatory standards.
The first delay of the start of the detailed SFDR reporting duties was welcomed by the investment industry since asset managers feared that they would not be able to comply with the new regulation due to the short time period between the release of the key rules to support the implementation of SFDR and the start date.
That said, the investment industry has not received much guidance on the technical standards since the first delay and is therefore still in limbo with regard to the requirements to comply with the new regulation.
Besides the reporting duties, one of the areas where it is visible that the investment industry is struggling with the implementation is the classification of funds with regard to Article 6, 8, or 9 of SFDR.
The further delay of the implementation of the technical standards and the respective duties of the asset managers should be seen as positive, since this will allow the policymakers to communicate their expectations prior to the issuance of the final rules to achieve smooth implementation once the technical standards have been released.
SFDR: ‘Vague’ Article 8 definition increases risk of greenwashing
Such a communication will enable asset managers, data vendors, and financial advisers to adjust their businesses to the new requirements ahead of time.
This would be needed for a start of the new SFDR regime without frictions for asset managers and their investors. I personally believe that the delay is appreciated by the asset management industry and regulators, as this delay will give them the time needed for the implementation of SFDR.
Detlef Glow is head of Lipper EMEA Research at Refinitiv, a London Stock Exchange business