Sustainability and Asset Management

The SFDR forms part of the “Action Plan Financing Sustainable Growth” of the European Commission and aspires to strike “an appropriate balance (…) between flexibility and the standardisation of disclosure necessary to generate the data needed for investment decisions”, specifically with regards to the disclosure of sustainability-related information. The article is the outcome of the fruitful collaboration within the International Center for Financial law & Governance (ICFG), one of the research centers of Erasmus School of Law which specifically focusses on financial law and governance at financial corporations. 

Smits (Fellow ICFG) and Galle (Academic Director ICFG), in collaboration with other Fellows of the ICFG, empirically examined the compliance of the asset managers of Dutch UCITS with the SFDR. Moreover, the authors discuss the background of their research, inter alia describing the political context, the legal framework, and the regulatory landscape of the SFDR. For the purposes of illustration and inspiration, the comparison of the EU’s SFDR with the UK’s Sustainability Disclosure Requirements is made in the contribution as well. 

The contribution presents aggregated figures on the sustainability-related information, which is subjected to mandatory disclosure under the SFDR, inter alia on the exclusion criteria with regards to investments of UCITS. On the one hand, considerable progress is observed in terms of standardized disclosure, most importantly by means of the use of the mandatory templates of the SFDR. On the other hand, several hurdles were identified with regard to the application of the SFDR in practice, which culminated in recommendations on the assessment and comparison of sustainability-related (financial) information which is disclosed under the SFDR. These recommendations might significantly enhance the potential of a well-functioning SFDR.