Sustainable Finance Disclosures Regulation (“SFDR”)
The Sustainable Finance Disclosure Regulation (“SFDR”) came into effect on the 10th of March 2021. The SFDR was introduced by the European Commission alongside (the “Taxonomy Regulation”) and (the “Low Carbon and Positive Impacts Benchmarks Regulation”) as part of a package of legislative measures arising from the European Commission’s Action Plan on Sustainable Finance.
The SFDR sets out harmonised rules on transparency and aims to include environmental, social and governance (ESG) “sustainability” considerations and risks in the decision-making process of investors and asset managers in a consistent manner across the EU financial services sector.
The SFDR introduces additional disclosure obligations for manufacturers of financial products and financial advisers toward end-investors. The Regulations will require impacted firms to integrate sustainability into their investment processes and to consider the adverse impacts of their investments on sustainability factors. The requirements apply regardless of whether the client has indicated an ESG preference or not.
A sustainable investment product is where a product is sold as promoting environmental or social characteristics. It is envisaged that greater transparency and sustainability-related information will enable investors to compare financial products and to make informed investment decisions about ESG products.
McCarney Financial Services Limited does not currently consider the adverse impacts of investment decisions on sustainability, however, the firm will review this approach on an annual basis.
