CSSF extends submission deadline for SFDR pre-contractual disclosure data collection
The Commission de Surveillance du Secteur Financier (CSSF) has made significant strides in its efforts to enhance transparency regarding sustainability-related information in the financial sector, guided by the Sustainable Finance Disclosure Regulation (SFDR) and the Taxonomy Regulation (TR). A vital part of this initiative is the data collection exercise relating to pre-contractual product disclosure information. In a recent turn of events, the CSSF announced an extension to the initial submission deadline for this exercise.
In its communiqué issued on 27th July 2022, the CSSF announced its intention to launch a data collection exercise related to SFDR and TR. This move was followed up by a communiqué published on 24th March 2023 detailing the launch of the data collection exercise.
Investment fund managers (IFMs) and institutions for occupational retirement provision (IORPs), qualifying as financial market participants (FMPs), were required to include sustainability-related information in the pre-contractual disclosures of financial products in accordance with SFDR, TR, and the SFDR Regulatory Technical Standards (RTS). The aim of this data collection exercise was to collect, in a digital format, information contained in pre-contractual disclosure documents/templates.
A broad range of FMPs were included in the scope of this data collection exercise, covering UCITS management companies, authorized AIFMs, registered AIFMs in relation to all Luxembourg-domiciled regulated AIFs they manage, and IORPs subject to specific laws.The user guide provided clarifications on the content and the format of the information to be reported.
Following discussions with financial market participants, the CSSF recognized the complexities of SFDR reporting and extended the deadline for the initial report submission on pre-contractual information for all financial products within the scope of the data collection exercise. As per CSSF communiqué dated 4 May 2023, FMPs are now requested to submit their initial report(s) by 15th June 2023 on a best-effort basis, and in any event, by 31st October 2023.
The decision to extend the initial submission deadline for the SFDR data collection exercise on pre-contractual disclosures underscores the CSSF's commitment to engaging with market participants and recognizing the complexities of SFDR requirements. While the extension provides additional flexibility, it is critical for FMPs to stay vigilant and ensure that their disclosures are compliant, accurate, and up-to-date.
If you have any questions regarding the information above, our investment management team is here to help you. Please do not hesitate to contact us for expert guidance.
Taxonomy: EU Commission publishes FAQ to clarify the content of the disclosures delegated regulation under Article 8
The EU Commission published on 6 October 2022 the updated FAQs to clarify the content of the Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 (the “Disclosures Delegated Regulation”) under Article 8 of Regulation (EU) 2020/852 of 18 June 2020 (the “Taxonomy Regulation”) to assist with its implementation. Article 8 of the Taxonomy Regulation applies to undertakings which are subject to an obligation to publish non-financial information according to Article 19a or Article 29a of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, as amended (the “Directive 2013/34”). Therefore, large undertakings which are public-interest entities exceeding on their balance sheet dates the criterion of the average number of 500 employees during the financial year should pay attention to the updated FAQs. Idem for the public-interest entities, which are parent undertakings of a large group exceeding on its balance sheet dates, on a consolidated basis, the criterion of the average number of 500 employees during the financial year. The terms large undertakings and public-interest entities are defined in Directive 2013/34.
The prior version of the updated FAQs dated January 2022 contained 22 frequently asked questions on how financial and non-financial undertakings should report taxonomy-eligible economic activities and assets under the Disclosures Delegated Regulation. The Disclosures Delegated Regulation contains disclosure provisions for non-financial undertakings, assets managers, credit institutions, investment firms, insurance and reinsurance undertakings, as well as disclosure rules common to all financial undertakings and disclosure rules common to all financial undertakings and non-financial undertakings concerning the implementation of Article 8 of Taxonomy Regulation.
The 33 frequently asked questions are separated into the following 9 points:
- General FAQs;
- Non-financial undertakings;
- Financial undertakings;
- Asset managers;
- Insurers;
- Credit institutions;
- Debt market;
- Interaction with other regulations;
The EU Commission clarifies the following points in the updated FAQs:
- How is “Taxonomy-eligible economic activity” defined;
- How may asset managers weigh their holdings in a portfolio to report Taxonomy-eligible assets?;
- How to identify Taxonomy-eligible activities of which activity descriptions contain qualifiers, such as ‘low carbon’ and ‘climate-related perils?;
- How should a credit institution with a Markets in Financial Instruments Directive (MiFID) investment firm license report its Taxonomy-eligible economic activities?;
- How to assess and report the Taxonomy-eligibility of a debt asset such as a bond or loan?;
- Can green debt instruments from non-EU entities be reported as Taxonomy-eligible?;
- Can green sovereign debt be reported as Taxonomy-eligible?;
- What activities should an insurer and a reinsurer consider when reporting their underwriting activities in the context of Taxonomy-eligibility reporting?; and
- How does the Disclosures Delegated Regulation interact with the proposed requirements on corporate sustainability reporting (‘the CSRD proposal’)?
The updated FAQ is available here.
Don’t hesitate to contact our banking, finance and capital markets team if you need further information.
