On 25 June, the Norwegian Financial Supervisory Authority (the “NFSA”) published a report on Norwegian asset manager’s compliance with the SFDR.

The report presents the main outcomes from a survey conducted by the NFSA of investment firms and selected fund managers and managers of UCIT funds and AIFMs in 2024 and 2025.

Our overall take on the report is that it includes recommendations to entities in scope of the SFDR that are new to the market. This means that many entities are presumably not in full compliance with the recommendations in the report. Some of the recommendations and our comments are as follows:

• Article 6 – product level disclosure in pre-contractual documents: The report states that this disclosure should at a minimum include information about which sustainability risks have been identified as the most relevant for each product, and what measures have been taken to mitigate these risks.

Permian comment: To prepare for this disclosure, it is recommended to involve the AIFM’s risk manager. Permian holds a separate risk session when preparing this disclosure where all relevant risks are identified, mitigating activities are included and likely impact on returns of the fund are assessed.  We recommend taking this into account for future pre-contractual documents and the 4-2 form (No. 4-2 skjema).

• Article 5 - Information on how remuneration policies are consistent with the integration of sustainability risks. According to this article, AIFM’s must disclose how their remuneration systems consider sustainability risks. The report states that the assessment of the NFSA is that this provision is mandatory for all financial market participants, including for registered AIFM’s.

Permian comment: This is a clarification which has not been obvious to the market. Several registered AIFM’s may not have disclosed this information since it is not mandatory for such AIFM’s to have a remuneration policy. We recommend that registered AIFM’s update their website disclosures in accordance with the report.

• Article 4 - PAI statements at entity level. The NFSA found that many AIFMs fail to comply with SFDR Article 4 requirements on Principal Adverse Impact (PAI) disclosures. Common issues include missing or inadequate PAI statements, vague methodologies, unclear use of external data, and poor justification for indicator selection. Few firms explain how they track progress or adapt when no improvement occurs. Some firms wrongly claim that PAI is irrelevant or cite insufficient data and lack of client demand. These are justifications NFSA does not accept. Overall, there is a clear gap between regulatory expectations and current market practices.

Permian comment: In October 2024, ESMA published a valuable report on PAI disclosures that we find particularly helpful when preparing compliant statements. We recommend that all managers, whether required to report on PAIs or doing so voluntarily, review the report, as it provides useful guidance for improving the quality and clarity of their disclosures. Link to the report can be found here.

• Article 7 - Transparency of adverse sustainability impacts at financial product level. This is a comply-or-explain provision where AIFM’s can opt to consider “PAI” at fund level or explain why PAI data is not taken into account. In the report, the NFSA points out that limited access to data alone is not sufficient justification for not considering PAI, and further notes that the SFDR allow for reasonable assumptions to be made and that taking PAI into account therefore, can be achieved even if detailed data is not available.

Permian comment: This is an already known position from the NFSA and should be considered for future pre-contractual disclosures and in the 4-2 form.

• Article 8 and 9 – Sustainable investments. As regards sustainable investments, the NFSA repeats a statement from an ESMA document that such products must take into account mandatory PAI indicators in SFDR level 2, table 1 in annex I, as well as relevant optional PAI indicators from tables 2 and 3, in the DNSH assessment.

Permian comment: To be noted as a reminder.

• Article 10 – Product-level website disclosures. The report clarifies that the NFSA expects all financial market participants to disclose all article 8 and 9 product-level disclosures on their public website and not exclusively on websites that require login.

Permian comment: Although most Norwegian AIFMs already follow this, it is a clarification that might not be obvious if the AIF is a closed fund since all applicable investors would in such case have access to the disclosures on the investor portal.

• Article 11 – Periodic reporting. The report clarifies the NFSA’s expectations regarding the annual report for article 8 and 9 funds. The report states that the quality of the reviewed reports varied significantly, particularly when explaining how environmental or social characteristics were achieved. Common weaknesses included unclear presentation of external data and poor comparability with benchmarks. In some cases, disclosures were not easily accessible, undermining regulatory requirements.

Permian comment: We note that some managers fail to define clear, measurable KPIs in their pre-contractual disclosures to track the achievement of environmental or social characteristics. This lack of upfront clarity often results in weak periodic reporting, as noted by NFSA. We recommend that managers establish well-defined KPIs supported by reliable data sources from the outset. Periodic reports should clearly demonstrate progress toward sustainability goals, with transparent explanations of data sources and methodologies (especially when benchmark comparisons are used). The aim is to make sustainability reporting both credible and easy for investors to understand.

Please click here for a link to the NFSA report.