The regulatory technical standards supplementing the EU Sustainable Finance Disclosure Regulation (EU SFDR)—which had been expected to apply from 1 January 2022—will be delayed by six months until 1 July 2022.
The European Commission has announced in a letter to the European Parliament that due to "the length and technical detail of those regulatory technical standards (RTS), the late submissions to the Commission and envisaged amendments", the RTS supplementing the EU SFDR will be delayed by six months. All 13 RTS will now be bundled into a single delegated act which will apply from 1 July 2022. This is now expected to be published in the Autumn.
It had been rumoured that the Commission would imminently provide guidance on several priority EU SFDR "known unknowns" in response to the ESAs' letter of 7 January 2021. This has been hotly anticipated for several months, but it now seems more likely that the Commission's response will follow with the RTS in the Autumn.
On the face of it, the delay may seem like welcome breathing space for firms already occupied with a vast range of new sustainability (and other!) rules; it preserves the status quo for another six months. However, it will lead to a longer period of uncertainty as regards the application of EU SFDR, which some firms may consider sub-optimal. In particular, questions regarding its scope will persist, as will uncertainty regarding the precise detail of firms' obligations.
For example, the ESAs issued a joint Supervisory Statement in February 2021 (as a result of a previous delay to the RTS) which encouraged—but did not require—firms to use the draft RTS as a reference point until its formal application. Firms and industry bodies had raised concerns about the inconsistency between this statement and the Commission's earlier messaging that—pending the application of the RTS and its accompanying templates—firms should comply with the high level and principles based requirements of EU SFDR Level 1 on a best efforts basis. The picture is arguably more confused by the reference to "envisaged amendments" to the RTS as one of the reasons for the delay.
The affected RTS relate to the following areas:
- Details of the content and presentation of the information on "do no significant harm".
- Details of the content, methodologies and presentation of information in respect of certain sustainability indicators.
- Details of the content and presentation of the pre-contractual information to be disclosed under Articles 8 and 9 EU SFDR.
- Details of the content and presentation of the website disclosures under Article 10 EU SFDR.
- Details of the content and presentation of the information disclosed in periodic reports under Article 11 EU SFDR.
If you would like to discuss the implications of the delay, or the RTS generally, for your firm then please contact any of the persons below or your usual Travers Smith contact.
