Written by 9:15 am EU Investment

Heading Towards A Greener Future Into The New Year – SFDR RTS Deadline Approaches – Fund Management/ REITs


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On the rapidly developing subject on sustainable finance, yet
another deadline looms. On the 1st of January 2023 the
final report on the on the draft Regulatory
Technical Standards (“RTS”)
, published by the
European Supervisory Authorities (“ESAs”) on the
30th of September 2022, comes into force.

The main aim of the amendments is to ensure that disclosures
about the degree to which investments are in taxonomy-aligned
activities provide for full transparency about investments in
fossil gas and nuclear energy activities, in particular on the
proportion such investments in fossil gas and nuclear energy
activities, in particular on the proportion such investments
represent within all investments and in environmentally sustainable
economic activities.

The RTS outline amendments to Delegated Regulation (EU)
2022/1288. The main amendments provide templates for how financial
products that promote environmental characteristics (i.e. Article 8
products) and those that have sustainable investment as an
objective (i.e. Article 9 products) should be presenting their
pre-contractual disclosures and period disclosures.

The ESAs also published a Questions and Answers (“Q&As”)
document on 17th November 2022 on the SFDR Delegated
Regulation (Commission Delegated Regulation (EU) 2022/1288) for
further guidance as to how the disclosures should be addressed in
practice.

Looking at the local expectations in the context of sustainable
finance, on 20th December 2022 the Malta Financial
Services Authority (“MFSA”) also issued a letter addressed to Board Members and
Compliance Officers of fund managers, self-managed schemes and
third-country fund managers marketing their funds in Malta through
the AIFMD national private placement regime, outlining their
expectations in relation to ESG requirements.

The letter highlights how through an exercise carried out by the
MFSA, it seems that the majority of local investment funds still
fall within the category of Article 6 products, with only a small
part of the local population of investment funds being classified
as Article 8 or Article 9 products. The letter also indicates how
the MFSA is currently carrying out a desk-based review of the
website disclosures used by fund managers and will also be issuing
a set of high-level observations in this regard. The MFSA will
thereafter be turning their attention to product level disclosures
by adopting a risk-based approach. The MFSA letter stresses how it
expects that fund managers to strive towards transitioning to
green, embracing sustainable finance and integrating this in their
governance, risk management and investment policies. The letter
also hints that the MFSA expects that sustainability is
incorporated within the culture of fund managers, in particular
during Board Meetings.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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