The regulatory technical standards supplementing the EU Sustainable Finance Disclosure Regulation (EU SFDR) have been delayed again by a further six months until 1 January 2023.

In July 2021 we published a briefing on the announcement by the European Commission of a delay to the application of the regulatory technical standards (RTS), from 1 January 2022 to 1 July 2022. This itself represented a delay from the original timetable, which envisaged that the RTS would be applicable from the effective date of EU SFDR, 10 March 2021.

The European Commission has now published a letter dated 25 November 2021 addressed to the Chair of the European Parliament's Committee on Economic and Monetary Affairs (ECON) and the President of the Ecofin Council at the European Council in which it confirms that, due to the length and technical detail of the 13 RTS under consideration (which will be bundled into a single delegated act), it is further postponing the date of application of the RTS to 1 January 2023.

As previously reported, the affected RTS relate to the following areas:

  • Details of the content and presentation of the information on "do no significant harm".
  • Details of the content, methodologies and presentation of information in respect of certain sustainability indicators (the mandatory principal adverse impact indicators that certain firms will need to consider and report upon).
  • Details of the content and presentation of the pre-contractual information to be disclosed under Articles 8 and 9 EU SFDR.
  • Details of the content and presentation of the website disclosures under Article 10 EU SFDR.
  • Details of the content and presentation of the information disclosed in periodic reports under Article 11 EU SFDR.

Principal Adverse Impact reporting

The draft RTS had contained transitional provisions for those financial market participants (which includes AIFMs and MiFID portfolio managers, "FMPs") required by EU SFDR to publish a detailed statement on their due diligence policies relating to the principal adverse impacts of their investment decisions on sustainability factors. Because of the delay, those draft transitional provisions are no longer relevant. Instead, the Commission expects FMPs subject to this obligation to publish a PAI statement which complies with the RTS' detailed disclosure requirements for the first time by 30 June 2023. In other words, the first reference period during which such FMPs must collect data to disclose pursuant to the RTS' detailed requirements will be 1 January 2022 to 31 December 2022.

Articles 8 and 9 EU SFDR product reporting

Although it is not expressly addressed by the letter, this development will further delay the obligation for FMPs managing Article 8 and 9 EU SFDR products to comply with the detailed content and presentational requirements to which we refer above until 1 January 2023. Relevant FMPs are likely to be expected to prepare such disclosures on a best efforts basis until then.