For funds categorised as Article 8 or 9 under the Sustainable Finance Disclosure Regulation (“SFDR”) with a 31 December financial year end, the periodic reporting deadline of 30 June is approaching with 100 days to go.  Now is the ideal time to start preparing for this.

In this Q&A, we set out the key considerations for SFDR periodic reporting.  

Which funds are in scope?

Funds classified as Article 8 or 9 under SFDR must provide periodic reports on the attainment of the environmental/social characteristics (Article 8) or the sustainable investment objective (Article 9) and other associated metrics and information.  This includes EU alternative investment funds (AIFs) as well as non-EU funds marketed into Europe under any national private placement regimes, provided they are classified as Article 8 or 9. Funds relying on reverse solicitation are not required to prepare the SFDR periodic reports. 

What format is the report in?

The SFDR periodic report must be provided in a mandatory template.  This applies even if the fund did not use the template for the pre-contractual disclosures.   In that scenario, a longer lead time may be required to be able to complete the periodic report as several areas may not have been disclosed or considered at pre-contractual stage.

Where does it need to be published?

The SFDR periodic report should be included in the Alternative Investment Fund Managers Directive (2011/61/EU) (“AIFMD”) annual financial report for the fund. 

Who should the report go to?

The report needs to be made available to investors and relevant EU regulators on request.  The latter will depend on the jurisdiction of the fund and where it was marketed in the EU.  In some EU Member States they require this to be filed with the regulator.

When does it need to be finalised by?

The report must be prepared within six months following the end of a financial year so for funds with a financial year end of 31 December, the year end is 30 June.

What if the fund had its final closing?

The European Commission has confirmed that regardless of whether the fund is closed the periodic report must be made in the mandatory template.

Where do we start with completing the report? 

The starting point should be your SFDR pre-contractual disclosure to review what was committed to for that Article 8 or 9 fund.  Beyond this, there should be reference to the regulation itself and consideration of European Commission and regulatory guidance on the periodic reporting requirements.

Where can we get further information?

Please reach out to ukreg@proskauer.com for any further information and support on completing the SFDR periodic reports.

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Photo of John Verwey John Verwey

John Verwey is a partner in the Private Funds Group. John advises on a wide number of regulatory issues at a national UK and European level, including firm authorisations, appointed representative arrangements, change in control, market abuse. He represents a variety of clients…

John Verwey is a partner in the Private Funds Group. John advises on a wide number of regulatory issues at a national UK and European level, including firm authorisations, appointed representative arrangements, change in control, market abuse. He represents a variety of clients that range from small start-up fund managers to established global fund advisers and managers.

A particular area of focus for John is Alternative Investment Fund Managers Directive (AIFMD) and Markets in Financial Instruments Directive II (MiFID II).  This includes advising on pre-marketing and marketing strategies for fund managers, advising on the Level One and Lever Two requirements under AIFMD and implementing UK rules and legislation, and advising on the organizational and conduct of business requirements under MiFID II.

Photo of Rachel Lowe Rachel Lowe

Rachel E. Lowe is a special regulatory counsel in the Corporate Department and a member of the Private Investment Funds Group.

Rachel advises on financial services regulation specializing in sustainable finance and ESG regulation. She has particular expertise in drafting and advising on…

Rachel E. Lowe is a special regulatory counsel in the Corporate Department and a member of the Private Investment Funds Group.

Rachel advises on financial services regulation specializing in sustainable finance and ESG regulation. She has particular expertise in drafting and advising on the Sustainable Finance Disclosure Regulation (SFDR) and the Taxonomy Regulation. Rachel has also supported with EU MiFID and AIFMD sustainability updates for clients, including from a governance and organizational perspective, as well as providing drafting and training support. She also advises on the Corporate Sustainability Reporting Directive (CSRD), including analysis of its applicability for large international group structures.

From a UK perspective, Rachel supports clients with the TCFD-related requirements in the Financial Conduct Authority’s ESG Sourcebook and is increasingly engaged on the UK’s Sustainability Disclosure Requirements (SDR).

More broadly, Rachel has worked with litigation colleagues to assist clients with understanding and mitigating greenwashing-related legal and regulatory risk.

Photo of Amar Unadkat Amar Unadkat

Amar Unadkat is a special regulatory counsel in the Corporate Department and a member of the Private Funds Group.

Amar advises on a variety of financial services regulatory and compliance matters both from a UK and European perspective. Amar regularly advises his clients…

Amar Unadkat is a special regulatory counsel in the Corporate Department and a member of the Private Funds Group.

Amar advises on a variety of financial services regulatory and compliance matters both from a UK and European perspective. Amar regularly advises his clients on issues relating to the Alternative Investment Fund Managers Directive (“AIFMD”), the second Markets in Financial Instruments Directive (“MiFID II”), as well as the latest ESG developments. Amar also focusses on UK regulatory compliance matters, including the FCA’s change of control regime, the appointed representative regime and the Senior Managers & Certification Regime.

Amar’s clients include private equity firms, investment managers and advisers, firms in the FinTech space, wealth management businesses, banks and sovereign wealth funds.

Photo of Sulaiman Malik Sulaiman Malik

Sulaiman Malik is an associate in the Corporate Department and a member of the Private Funds Group.

Sulaiman advises clients on a range of UK and international financial regulation. He advises private equity funds, hedge funds, sovereign wealth funds and other asset managers…

Sulaiman Malik is an associate in the Corporate Department and a member of the Private Funds Group.

Sulaiman advises clients on a range of UK and international financial regulation. He advises private equity funds, hedge funds, sovereign wealth funds and other asset managers, as well as banks, FinTechs, broker-dealers and governments.

Prior to joining Proskauer, Sulaiman trained at Simmons & Simmons in London, where he was seconded to Brevan Howard. He has also spent time at the UK’s Ministry of Justice and as an adviser to the Mayor of Brisbane, in Australia.

Sulaiman is a passionate advocate for diversity and inclusion. He previously worked at Rare, a market-leading diversity consultancy, and provides pro bono legal advice to a range of community and civil rights organizations.

Photo of Michael Singh Michael Singh

Michael is an associate in the Private Funds Group in the Corporate Department.

Michael advises clients on a variety of regulatory issues both from a UK and European perspective. He also helps clients on fund related transactions. His clients include private equity firms…

Michael is an associate in the Private Funds Group in the Corporate Department.

Michael advises clients on a variety of regulatory issues both from a UK and European perspective. He also helps clients on fund related transactions. His clients include private equity firms, investment managers, FinTech companies and wealth management businesses.

He is dual-qualified as a German lawyer (“Rechtsanwalt”) and Solicitor of England and Wales and previously was in-house counsel at Deutsche Bank.