The three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) published a statement providing clarifications on the draft regulatory technical standards (RTS) issued under the Sustainable Finance Disclosure Regulation (SFDR), which include the financial product disclosures under the Taxonomy Regulation.

RTS regulatory technical standards

The statement provides clarification on key areas of the SFDR disclosures, including:

  • use of sustainability indicators;
  • principal adverse impact (PAI) disclosures;
  • financial product disclosures;
  • direct and indirect investments;
  • taxonomy-related financial product disclosures;
  • “do not significantly harm” (DNSH) disclosures; and
  • disclosures for products with investment options

RTS regulatory technical standards

Delegated Regulation 

The statement is part of the ESAs’ on-going efforts to promote a better understanding of the disclosures required under the technical standards of the SFDR ahead of the planned application of the rules on 1 January 2023, as laid out in the Delegated Regulation adopted by the European Commission on 6 April 2022. The regulatory technical standards in this delegated regulation prescribe the information that will:

  • enhance the comparability of financial products from different financial services sectors and
  • facilitate the application of ‘sustainability preferences’ requirements laid down in Delegated Regulations (EU) 2021/12536 (Mifid II sustainability preferences) and (EU) 2021/12577 (Insurance Distribution Directive sustainability preferences).

The co-legislators saw merit in accompanying disclosures of adverse sustainability impacts by regulatory technical standards (RTS) jointly developed by the ESAs on the content, methodologies and presentation of the relevant information to be disclosed under this Regulation.

RTS regulatory technical standards

Regulatory Technical Standards

The ESAs have submitted the draft RTS to the Commission in February 2021 and proposed that the RTS should apply from 1 January 2022. Owing to the length and technical detail of those regulatory technical standards, and envisaged amendments, the Commission decided to delay the application of these RTS to January 2023 to facilitate the smooth implementation of the standards by product manufacturers, financial advisers and supervisors.

The ESAs will continue to promote a better understanding of the RTS as adopted in the Delegated Regulation under the SFDR 

RTS regulatory technical standards

Source: ESMA