EU Sustainable Finance Disclosure Regulation (SFDR)
ENFORCEMENT TIMELINE
Level 1 requirements applicable from March 10, 2021 (Level 2 Regulatory Technical Standards fully applicable from January 1, 2023)
Overview
This regulation requires financial market participants and financial advisers to integrate sustainability risks, disclose principal adverse impacts (PAI), and provide detailed pre-contractual and periodic disclosures depending on how a fund is classified (Article 6, 8, or 9 funds).
Enforcement Timeline
March 10, 2021: Level 1 (the basic principles) becomes applicable.
January 1, 2023: Level 2 (the Regulatory Technical Standards, or RTS) becomes fully applicable.
2024 to 2025: The European Commission advances a comprehensive review, sometimes referred to as SFDR 2.0.
Business Impact
The data demands are cascading down to ordinary businesses that raise capital from European institutional investors, which are increasingly asked to supply PAI indicator data, such as GHG emissions, hazardous waste volumes, and gender pay gaps, to their investors.