Moving forward in completing the European ESG regulatory framework, the Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022 supplementing the Regulation (EU) 2019/2088 of 27 November 2019 on sustainability-related disclosures in the financial services sector (the "Level 2 SFDR") (the Regulation (EU) 2019/2088 being the "SFDR") was published on the Official Journal of the European Union on Monday 25 July 2022.
The Level 2 SFDR applies to financial market participants and financial advisers, such as UCITS Management Companies, AIFMs, Credit Institutions and Investment Firms (the financial market participants and financial advisers being, the "Participants" for the purpose of the relevant provisions of the Level 2 SFDR applicable to them, as the case may be).
The Level 2 SFDR requires Participants to disclose sustainability related information in pre-contractual documents (i.e., prospectuses for investment funds), on websites and in periodic reports (i.e., the annual reports for investment funds). The extent and the type of disclosure depends mainly on whether the financial product follows the regime of Article 8 or 9 of SFDR, while provisions related to PAIs-related disclosures also apply to the so-called article 6 products.
For the purpose of the above-mentioned disclosures, Participants shall use the templates annexed to the Level 2, namely:
Considering that the deadline to submit the updated prospectuses/issuing documents to the CSSF is 31 October 2022, it is advisable to finalise the implementation as soon as possible in order for the Participants to be able to file such precontractual documents in due course.
In this respect, the CSSF announced that it will give priority for visa-stamping to those prospectuses/issuing documents of UCITS and authorised AIF for which updates are limited to reflect only the sustainability related disclosure changes required by the Level 2 SFDR and the Regulation (EU) 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment (the "Taxonomy Regulation"), in relation to the four objectives referred to in article 9 (c) to (f). Provided that submissions made pursuant to the filing procedure which will be put in place in this context are complete, compliant and received by the CSSF by 31 October 2022, the CSSF will endeavour to release the visa stamp prior to 31 December 2022.
For the time being, it is unclear whether the CSSF will engage in a fast-track procedure (as it was the case for the implementation of the SFDR and the Taxonomy Regulation into the prospectus), but it seems that it would be the case for the filing of UCITS prospectuses that shall be accompanied by a RTS confirmation letter. The CSSF should give more details in this respect at a later stage.
Below, a table summarizing the relevant application dates or deadlines in respect of the relevant provisions of the Level 2 SFDR:
|PAI||Precontractual product disclosures||Website product disclosures||Product disclosures in periodic reports|
Participants shall publish PAI disclosures under Level 2 SFDR on their website (including for financial market participants by publishing in their website Annex I) by 30.06.2023 for the first time.
Special attention must be paid with respect to funds that consider PAIs, as their prospectuses/issuing documents shall be updated to include disclosures under article 7.1 of SFDR by 30.12.2022.
Funds referred to in article 8 or 9 of SFDR shall comply with precontractual disclosures under Level 2 SFDR (including by inserting in their prospectuses/issuing documents Annex I or Annex II) by 01.01.2023.
The CSSF expects to receive updated prospectuses/issuing documents of UCITS, UCI Part II, SIF and SICAR by 31.10.2022.
For funds referred to in article 8 or 9 of the SFDR, financial market participants shall comply with website product disclosures under the Level 2 SFDR by 01.01.2023.
Periodic reports issued as from 01.01.2023, for funds referred to in article 8 or 9 of SFDR, shall comply with periodic report disclosures under the Level 2 SFDR (including by inserting in their periodic reports Annex IV or Annex V).
 In line with the European Supervisory Authorities’ position.
 As the first reference period is from 1 January 2022 to 31 December 2023.
 i.e., (a) a clear and reasoned explanation of whether, and, if so, how the fund considers principal adverse impacts on sustainability factors; and (b) a statement that information on principal adverse impacts on sustainability factors is available in the periodic reports.