AIFM Directive and the SFDR: changes and impacts on AIFs


Will the AIFM Directive, which came into force in 2013, be affected by the SFDR? Jean-Pierre Gomez, Head of Regulatory & Public Affairs, Societe Generale Securities Services Luxembourg, explains.

The  Alternative Investment Fund  Managers Directive (AIFMD) introduced licences for European Alternative Investment Fund Managers (AIFs) as well as a new form of depositary to monitor the assets of these AIFs, assets that cannot be held in custody in the networks of its sub-custodians, mainly in real estate and private equity investments.


The consultation launched in October 2020 by the European Commission with AIF asset managers and depositaries showed that the majority of EU countries do not want to amend the AIFMD level 1 text and, for example, want the AIF’s depositary to remain in the country in which the fund is domiciled.

Does the SFDR affect the AIFMD?

Since 10 March, asset management companies and AIF managers have been applying the first measures of the SFDR (Sustainable Finance Disclosure Regulation) by setting out details of funds' sustainable investment strategy and classification in their prospectuses. They are also providing non-financial and ESGdata. This has thus become a regulatory obligation. In April, the European Commission published a draft delegated act to incorporate sustainability risk in the investment decision into the AIFMD. The SFDR is therefore having a positive impact on AIFs.

What challenges does the SFDR pose?
  • The first challenge in implementing the SFDR is to find synergies in the introduction of IT tools with a view to avoiding unnecessary duplication and costs. 

  • The second challenge, which is far from easy, lies in collecting non-financial data, especially for real estate and private equity funds. Investors focused on sustainability and returns will push managers to incorporate these green criteria, which could quickly turn into major criteria. 

  • Other challenges, such as the lack of a universal definition of sustainability risk and ESG calculation methodology, should be anticipated. The practice of gold plating2 with more restrictive local rules could have consequences on cross-border distribution.

Societe Generale is actively participating in discussions on the SFDR and the AIFMD in Luxembourg, France and the other countries in which SGSS acts as an asset custodian:  Italy,  Germany  and Ireland.

Article published in Paperjam, ALFI Supplement September 21, 2021.

1 ESG: Environmental, Social and Governance.

2Gold plating: refers to the practice of national bodies exceeding the terms of European Union directives when implementing them into national law.