By Chris Walker
As part of HSBC Trustee & Depositary Services’ client forum on 14 October, Burges Salmon partner Tom Dunn and associate Alex Gillespie, alongside Eva Dauberton from the Investment Association, gave their insights on the significant forthcoming regulatory changes in respect of the Sustainable Finance Disclosure Regulations (or “SFDR”). The discussion focused on the practical implications for fund management companies, including UCITS ManCos and AIFMs, and considered how the investment industry should begin to prepare for the next phase of regulatory changes.
The SFDR aims to increase transparency around sustainable finance products by harmonising existing provisions on disclosures to investors and by presenting a set of standardised disclosure rules; SFDR also forms part of the EU’s Sustainable Finance Action plan, which features complementary legislative initiatives such as the Sustainable Finance Taxonomy Regulations and Low-Carbon Benchmark Regulations – all of which have the following key objectives:
- the re-orientation of capital flows towards sustainable investment;
- the consideration of environmental goals in financial decision-making in order to manage the financial risks posed by climate change; and
- increasing transparency in financial products.
Although the next phase of requirements under SFDR are currently due to be implemented once the UK’s Brexit Transition Period has passed and will not automatically be on-shored within the UK’s new regime, the UK Government continues to place an increasing emphasis on the role of sustainable investment and the importance of ESG factors in the commitment to a ‘green recovery’ from the Covid-19 pandemic and the ‘building back better’ strategy.
“Part of that will be our ambition for inter-operable global standards to drive forward the transition to net zero while providing the opportunity for UK asset managers to become global leaders in this field – capturing the opportunity from green finance within the UK market. To this end, I’ve been clear that at the very least, we will match the ambition of the EU Sustainable Finance Action Plan, and we will say more about that in due course.” John Glen MP, Economic Secretary to the Treasury