This update covers the period from the second half of January 2023 until the end of May 2023. Several interesting publications from public authorities regarding the Sustainable Finance Disclosure Regulation EU 2019/2088 (SFDR) have been made during the period. Our view on the main takeaways for Swedish and Norwegian AIFMs is listed below.

Updated editable versions of pre-contractual and periodic reporting templates

The European Supervisory Authorities (ESAs) provided updated versions of the templates set out in the Delegated Regulation EU 2022/1288 of the SFDR (RTS).

The following templates exist in editable version in English: pre-contractual templates for article 8 and 9 funds, periodic reporting templates for article 8 and 9 funds, and principle adverse impact statement template.

The editable versions are accessible through the ESMA or EIOPA website by clicking here.

Permian comment: This was a welcomed publication of editable versions of the latest templates.

The RTS are in force in the EU as of 1 January 2023 but not yet in Norway. We nonetheless recommend that Norwegian AIFMs prepare their disclosures under the SFDR in accordance with the RTS.

Proposed changes to the SFDR RTS

The ESA’s published a consultation paper proposing amendments to the RTS on 12 April 2023. Proposed amendments include a) simplification of pre-contractual and periodic disclosure templates; and b) additional social indicators for the calculation of principle adverse impact.

For further information, please click here.

Permian comment: To be noted. No action necessary by AIFMs at the moment.

Updated Q&A from the European Commission

On 14 April 2023, additional answers on the SFDR were published. Some of the key matters covered were the following:

• The definition of sustainable investment was clarified as follows: a) a transition plan itself is likely not sufficient to qualify as a sustainable investment (i.e. an activity that has a future aim to meet the 'do no significant harm' (DNSH) criteria is not sufficient); and b) the SFDR does not set out minimum requirements regarding concepts such as contribution, DNSH or good governance. Instead, financial market participants must carry out their own assessment for each investment and disclose their underlying assumptions.

• The concept to “consider” principle adverse impacts (PAI) was clarified as follows: it means to publish adverse impacts, and to implement procedures to mitigate the harm.

For further information, please click here.

Also, on 17 May 2023, the ESA’s published a document with consolidated Q&A on the SFDR. To access the consolidated version, please click here.

Permian comment:  AIFMs are recommended to ensure that any transition investment under an article 9 fund is supported by more than a transition plan (to qualify as a sustainable investment). Furthermore, AIFMs are recommended to ensure that they have procedures in place to mitigate harmful impacts for investments in funds that consider PAI. There could also be additional information in the Q&A to be considered by AIFMs.

Draft Delegated Act to the Taxonomy Regulation published by the European Commission

On 5 April 2023, the European Commission published, for consultation, a Draft Delegated Act with technical screening criteria for the remaining four environmental objectives under the Taxonomy Regulation. The environmental objectives covered by the draft Delegated Act are the following:

• sustainable use and protection of water and marine resources;
• transition to a circular economy;
• pollution, prevention and control; and
• protection and restoration of biodiversity and ecosystem.

Furthermore, certain additional activities were proposed to be included in the Delegated Act relating to climate adaption and mitigation. Such additional economic activities are, for example, manufacturing activities relating to low carbon transport and electricity equipment and certain transitional activities (waterborne transport and aviation).

The Delegated Act is expected to enter into force on 1 January 2024, after which financial market participants may disclose taxonomy alignment based on the activities and environmental objectives included in the Act.

For further information, please click here.

Permian comment: To be noted for taxonomy alignment calculations in SFDR disclosures in 2024.

Greenwashing one of the Swedish Financial Supervisory Authority (SFSA)’s focus areas for 2023

The SFSA published their focus areas for 2023 on 20 January 2023, where greenwashing is one of them.

For further information, please click here. 

Permian comment: The statement stresses the importance of a prudent approach to sustainability-related regulation, with a focus on understanding relevant requirements and how to disclose the work accurately.

Publication from the SFSA on article 6 of the SFDR

On 2 February 2023, the SFSA published a clarification on pre-contractual templates. In its clarification, the SFSA stated that the pre-contractual templates for article 8 and 9 funds in the RTS does not include information in accordance with, for example, article 6.1 of the SFDR. Furthermore, it stated that it is up to the financial market participants to ensure that proper disclosures are included in accordance with the SFDR, Taxonomy Regulation and the RTS.

Article 6.1 states that pre-contractual information should include: a) the manner in which sustainability risks are integrated into their investment decisions; and b) the results of the assessment of the likely impacts of the sustainability risks on the returns of the financial products they make available.

For further information, please click here.

Permian comment: AIFMs to ensure that information relating to sustainability risks is included in their pre-contractual information in the main body of an information memorandum (or similar document) since the information is not included in the RTS templates.

Contact:

Anna Berntson Petas: anna.berntson@permian.se

Thomas Blomgren: thomas.blomgren@permian.se