Sustainable Finance Disclosure Regulation

One of the initiatives arising from the European Commission's Action Plan on Sustainable Finance is the Sustainable Finance Disclosure Regulation which is aimed at providing for consistent disclosure requirements in relation to sustainability.

The Sustainable Finance Disclosure Regulation sets out new harmonised disclosure requirements applicable to Financial Market Participants, Financial Advisors and Financial Products:

Financial Market Participants

Integration of sustainability risks into the investment process
Consideration of principal adverse impacts of investment on sustainability
Disclosure on how remuneration policy aligns with sustainability
Pre-contractual disclosure on how sustainability taken into account

Financial Advisers

Integration of sustainability risks into investment advice
Information on whether principal adverse impacts on sustainability are considered in the advice
Disclosure on how remuneration policy aligns with sustainability
Pre-contractual disclosure on how sustainability taken into account

Financial Products

Principal adverse impacts on sustainability factors of the product
If there are no adverse impacts disclose the reasons why

ESG Products

More granular disclosure requirements for funds that promote ESG objectives
Pre-contractual information on characteristics, objectives and benchmarks where used
Periodic reporting on the extent to which ESG characteristics are met, impact by means of relevant sustainability indicators
Consistency of marketing communications