{"id":895,"date":"2022-07-21T09:22:00","date_gmt":"2022-07-21T09:22:00","guid":{"rendered":"https:\/\/iqeq.com\/us\/insights\/sfdr-latest-updates-how-good-good-enough\/"},"modified":"2024-08-16T13:22:12","modified_gmt":"2024-08-16T13:22:12","slug":"sfdr-latest-updates-how-good-good-enough","status":"publish","type":"post","link":"https:\/\/iqeq.com\/us\/insights\/sfdr-latest-updates-how-good-good-enough\/","title":{"rendered":"SFDR latest updates: How good is good enough?"},"content":{"rendered":"
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A little over a year into the EU\u2019s Sustainable Finance Disclosure Regulation (SFDR) regime, firms are struggling to keep pace with regulatory change\u2014specifically the April 2022\u00a0delegated regulation<\/a>\u00a0that laid out regulatory technical standards (RTS) under SFDR.<\/strong><\/p>\n

The RTS were released to clarify the content, methodologies and presentation of the key data that financial market participants and advisers are required to include in sustainability disclosures, including impact statements, pre-contractual disclosures and periodic disclosures.<\/p>\n

The RTS are not expected to take effect until January 2023, but questions from fund management companies still abound on how they should implement the letter of the law.<\/strong><\/p>\n

Some reporting requires that underlying companies share a few key figures, but access to that data gets complicated where there is a lack of control and direct oversight, as in venture capital. In some cases, the investee company doesn\u2019t even have the data required\u2014but the onus is still on the reporting firm to share required information with regulators.<\/p>\n

For now, regulators are tolerant of firms employing their best efforts\u2014but it remains unclear what qualifies as a \u2018best effort,\u2019 and how good is good enough. I\u00a0wrote recently<\/a>\u00a0about SFDR updates as of April 2022; in this post, I\u2019ll outline additional clarifications and finish with recommended next steps.<\/p>\n

May 2022 SFDR Q&A clarifications<\/h2>\n

On 25 May 2022, the European Securities and Markets Authority (ESMA)\u00a0published responses<\/a>\u00a0to questions raised in the second SFDR Q&A issued by the European Commission. Responses from this most recent Q&A will likely impact fund managers\u2019 compliance preparations ahead of the RTS as well as their approach to compliance with SFDR overall.<\/p>\n

Key clarifications in this Q&A round for fund managers include:<\/p>\n