Final report and draft RTS on disclosures under SFDR
On 4 February 2021, The European Supervisory Authorities (ESAs) have published their final report and draft Regulatory Technical Standards (RTS) under the Regulation on sustainability-related disclosures in the financial services sector (SFDR).
The proposed RTS aim to strengthen protection for end-investors by improving Environmental, Social and Governance (ESG) disclosures to end-investors on the principal adverse impacts of investment decisions and on the sustainability features of a wide range of financial products.
The principal adverse impacts that investment decisions have on sustainability factors should be disclosed on the entity’s website. The disclosure should take the form of a statement showing how investments adversely impact indicators in relation to climate and environment; and social and employee matters, respect for human rights, anti-corruption and anti-bribery aspects. The ESAs have updated the list of indicators for principal adverse impacts. The principal adverse impact reporting in the SFDR is based on the principle of proportionality – for companies with fewer than 500 employees, the entity-level principal adverse impact reporting applies on a comply-or-explain basis.