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EUROPE: ESAs Publish Question related to Regulation (EU) 2019/2088

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European Union

The ESAs have published questions relating to Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (Sustainable Finance Disclosure Regulation 2019/2088).

The following questions are including with the Q&A:

  • Does Regulation (EU) 2019/2088 (SFDR) apply to registered (sometimes referred to as sub-threshold) AIFMs referred to in Article 3(2) AIFMD?
  • Does Regulation (EU) 2019/2088 (SFDR) apply to non-EU AIFMs, for example when they market a sustainable EU Alternative Investment Fund under a National Private Placement Regime?
  • As regards Article 4(4) of Regulation 2019/2088, must the calculation of the 500-employee threshold to the parent undertaking of a large group be applied to both EU and non-EU entities of the group without distinction as to the place of establishment of the group and/or subsidiary and does the due diligence statement include impacts of the parent undertaking only or must it include the impacts of the group at a consolidated level?
  • Must a product to which Article 9(1), (2) or (3) of Regulation (EU) 2019/2088 applies only invest in sustainable investments as defined in Article 2(17) SFDR? If not, is a minimum share of sustainable investments required (or would there be a maximum limit to the share of “other” investments)? Where an EU Climate Transition Benchmark (EU CTB) or EU Paris-aligned Benchmark (EU PAB) exists, is it necessary for a product to track an EU PAB or an EU CTB on a passive basis for Article 9(3) of Regulation (EU) 2019/2088 to apply to it?
  • In terms of Article 8 of Regulation (EU) 2019/2088, can the name of a product, which may include words like “sustainable”, “sustainability”, or “ESG” be considered to qualify a product to be promoting an environmental or social characteristic or to be having sustainable investment as its objective?
  • Regulation (EU) 2019/2088 applies to financial market participants and financial advisers. In particular, in respect of investment firms as defined in point (l) of Article 4(1) of Directive 2014/65/EU6, Article 2(1)(b) of Regulation (EU) 2019/2088 defines ‘an investment firm which provides portfolio management’ as one of the financial market participants to which it applies and Article 2(11)(d) of Regulation (EU) 2019/2088 defines ‘an investment firm which provides investment advice’ as one of the financial advisers to which it applies. For portfolios, or other types of tailored financial products managed in accordance with mandates given by clients on a discretionary client-by-client basis, do the disclosure requirements in SFDR apply at the level of the portfolio only or can they apply at the level of standardised portfolio solutions?

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