Sustainable Finance Disclosure Regulation (SFDR)

Supporting real assets’ financial transparency

Sustainable Finance Disclosure Regulation

The Sustainable Finance Disclosure Regulation (SFDR) was introduced in March 2021 and established sustainability-related disclosure obligations for the financial services sector.

SFDR was introduced under the European Union (EU) Action Plan for Sustainable Finance and it is a regulation developed with two core aims in mind:

To prevent greenwashing through greater transparency of environmental and social reporting amongst financial market products
To support the EU’s sustainable finance goals of reorienting capital flows towards sustainable investment.

Who has to comply?

SFDR applies to all financial market participants and financial advisers based in the EU, as well as investment managers or advisers based outside of the EU, who market (or intend to market) their products to clients in the EU.

There are three main fund level disclosure designations relating to SFDR. Obligated funds must be positioned as either Article 6, Article 8 or Article 9 and ensure they are ready to meet the disclosure requirements associated with the position.

Article 6 – transparency of the integration of sustainability risks (all Funds)

Article 8 – promotion of environmental and/or social characteristics

Article 9 – sustainable investment objective

What you need to do

Obligated financial market participants and advisers must be ready for the disclosure requirements from 1 January 2023.

At the fund level, those obligated should ensure regulatory fund documentation is prepared and where relevant is filed with the appropriate stakeholders.

In addition to Regulatory documentation, a delivery strategy is essential to ensure the ongoing disclosure requirements and fund positioning requirements are met over time.

How EVORA can help

EVORA can support our clients to evaluate and interpret SFDR technical and regulatory guidance and develop practical alignment strategies and compliance plans.

We offer SFDR screening of funds required to comply with the legislation and we support our clients with formalising their strategy in order to align with Articles 8 or 9 of the regulation.

We specialise in developing required SFDR formal documentation and assisting our clients with filling out mandatory SFDR templates. We also develop monitoring and reporting systems for funds allowing them to disclose in line with regulatory requirements.

We offer SFDR support to equity and debt real estate funds, as well as mixed strategy funds and our expertise also covers EU Taxonomy alignment for funds and entities required to disclose in line with the regulation.

Download the SFDR brochure

EVORA helps Arsenale SGR go beyond US regulatory requirements

The Challenge

Arsenale, based in Milan, Italy, was looking for an expert real estate consultant who could help them engage with their US-based partners in order to be ready to meet investors’ expectations in compliance with ESG EU regulations.

Our Approach

EVORA helped Arsenale SGR to go beyond US regulatory requirements, coordinating with the American team in order to incorporate ESG best practices across all the investment cycle.

The key challenge has been to reposition an Investment Management company from standard practice to compliance with the highest ESG standard. The work done will enable Arsenale to be ready to report/participate to SFDR, EU Taxonomy, GRESB, INREV, TCFD and PRI.

Key Outcomes

Click here to download the case study

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EVORA provide Edmond De Rothschild with the tools to understand SFDR

The Challenge

EVORA have been working with Edmond de Rothschild REIM UK since 2018 (previously Cording) and had the pleasure of:

Developing an ISO 1400 accredited environmental management system
Improving ESG data management
Guiding through GRESB assessments
Producing fund level ESG Reports
Dealing with investor requests
Providing ESG training.

Edmond de Rothschild REIM operate a residential built to rent fund with assets across the UK.

Their latest residential fund is marketed across Europe. As such, compliance with Sustainable Financial Disclosure Regulations (‘SFDR’) is necessary. The team wanted advice on how to position their fund to remain competitive and attractive for investors.

Our Approach

EVORA delivered a SFDR workshop – to enable the fund team to best understand the legislation, challenges, opportunities and requirements for future reporting. This was supplemented by lots of practical examples and insight on how peers were tackling the regulations.

We developed a necessary SFDR toolkit, including draft completion of annex, creation of fund action plan containing advised environmental and social characteristics and indicators, support on PAIs and draft website disclosures. A roadmap was produced collaboratively with the fund team to enable a full understanding about how to implement the fund ESG action plan and achieve characteristics, and how to deliver necessary future disclosures.

EVORA provided ESG representation in communications with Edmond de Rothschild REIM’s legal team to ensure suitability and compliance.

Key Outcomes

Click here to download the case study

Download

Click here to download the SFDR explainer

Download

We are proud to have supported some of the largest organisations make principles-based disclosures on ESG-related activity

“EVORA kept us informed on developments on SFDR and best practice on ESG strategy for debt funds. They successfully helped one of our debt funds align to SFDR Article 8”

Richard Craddock, Managing Director | Debt Investments, LaSalle Investment Management

“To make a European regulation relevant to a primarily American business, it was absolutely necessary to avoid a “cookie-cutter” approach. EVORA had a completely design-driven style, and carefully designed each document so that it formed strong, reliable relationships with the procedural architecture of the Management Company as a whole”

Edoardo Torrenti, Investment Team Member

Introducing some of our SFDR Team

Paul Sutcliffe

Executive Director and co-Founder

Paul Sutcliffe, Executive Director and co-Founder at EVORA Global, leads our SFDR team.

Paul is a Chartered Environmentalist, a Chartered Energy Manager and a full member of the Institute of Environmental Management and Assessment. He has over 20 years of experience in delivering strategic sustainability solutions to the real asset industry.

Paul is a member of EVORA’s board and also leads its Sustainable Finance service line. Over the last 2 years, Paul has focused on helping clients navigate the EU’s Sustainable Finance Disclosure and Taxonomy Regulations.

Paul has also provided strategic net zero carbon expertise to clients with global portfolios, with a focus on real asset investment decision-making.

Louise Russell

Associate Director

Aoife Busher

Managing Consultant

Kris Kolenc

Managing Consultant

Karolina Krzystek-De Ranter

Sustainability Consultant

Speak to the SFDR Team

Our experts are on hand to discuss your sustainability challenges and objectives

+44 (0)20 3326 7333

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Sustainable Finance Disclosure Regulation (SFDR)

Supporting real assets’ financial transparency