ESMA Priority issues relating to SFDR application
On 7 January 2021, the European Supervisory Authorities (“ESAs”), including ESMA and EBA, sent a letter to the European Commission (“EC”) on the priority issues relating to the application of the SFDR.
The ESAs have encountered several important areas of uncertainty in the interpretation of the SFDR. The key concerns relate to:
- the application of SFDR to non-EU Alternative Investment Fund Managers (“AIFMs”) and registered AIFMs;
- application of the 500-employee threshold for principal adverse impact reporting on parent undertakings of a large group;
- the meaning of “promotion” in the context of products promoting environmental or social characteristics;
- the application of Article 9 of SFDR; and
- the application of SFDR product rules to portfolios and dedicated funds.
The ESAs invite the EC to respond to the letter and the included priority questions, taking into account the required application of the SFDR by 10 March 2021.