The EU sustainability-related disclosure regulation (SFDR)—essentials
Produced in partnership with Dianne Bell of Freelance and Arun Srivastava of Paul Hastings
The EU sustainability-related disclosure regulation (SFDR)—essentials

The following Financial Services practice note produced in partnership with Dianne Bell of Freelance and Arun Srivastava of Paul Hastings provides comprehensive and up to date legal information covering:

  • The EU sustainability-related disclosure regulation (SFDR)—essentials
  • Overview of SFDR and related regimes
  • A shift from global voluntary principles to EU legislation
  • The EU Taxonomy Regulation
  • EU ESG integration proposals
  • Scope and application of the SFDR
  • In-scope firms
  • Financial products
  • SFDR application: timing and extraterritorial reach
  • Sustainability: new product classifications and ESG objectives
  • More...

This Practice Note analyses the scope and requirements of the EU regulation on sustainability-related disclosures in the financial services sector (Regulation (EU) 2019/2088).

Overview of SFDR and related regimes

Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (SFDR or Regulation (EU) 2019/2088) is a new European cross-sector transparency regulation for the financial services sector which forms part of the EU’s Sustainable Finance Action Plan adopted in March 2018 (Action Plan).

The SFDR introduces new detailed sustainability-related disclosure requirements for market participants, financial advisers, and financial products. More broadly, the SFDR requires firms to assess how they approach and incorporate sustainable investment into their investment and advisory processes.

At the firm level, the disclosure requirements include an explanation of how sustainability risks are integrated into investment processes and how the principal adverse impacts on certain environment, social and governance (ESG) indicators are taken into account (or a negative statement). At a product level, financial markets participants must assess and categorise their products under the SFDR. This involves determining whether or not the products promote environmental or social characteristics or have sustainable investment as an objective. Required product related pre-contractual disclosures must be provided which depend on the outcome of the above analysis, as well as periodic and website disclosures as detailed below.

A majority of these requirements (excluding for example periodic disclosures) apply in the EU (and

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