Alfi has asked the European Commission to delay the implementation of new rules on the disclosure of the sustainability of investments by 9 months to 1 January 2022.
According to the regulation on sustainability-related disclosures, which is supposed to come into force in March 2021, investors are required to publish information about the sustainability and climate risks of all their investments.
‘We remain concerned about the timing of implementation,’ Luxembourg’s fund and asset management association said in its answers to the European Commission’s consultation on the renewed sustainable finance strategy, dated 14 July 2020. ‘If the draft regulatory technical standards are released in January, it will not be possible to finalise website and prospectuses disclosures for all products by 10 March 2021. Hence, and in order to avoid confusion for investors, distribution and product manufacturers, we strongly propose to postpone the application date to 1st of January2022,’ Alfi went on to say. On Monday, the Financial Times quoted a leaked letter from the European fund and asset management association Efama supporting Alfi’s viewpoint.
Lack of reliable data
In its response to the Commission’s consultation, Alfi noted several complications with regards to the implementation of the new regulation.
Referring to lack of available sustainability data, Alfi noted the non-alignment ‘between the non-financial reporting of the EU corporates and the sustainability disclosure applicable to financial market participants, both in term of timing and content.’ It added meeting the disclosure requirements will be challenging for international investors, as ‘sustainability in the financial sector has so far been mainly an EU driven agenda.’
Second, it noted a lack of consistent implementation deadlines. ‘The requirements for companies’ data on the taxonomy and negative externalities will come into force years after the requirement for financial institutions to disclose ESG integration is in place,’ Alfi said.
Finally, Alfi noted a lack of correlation between ESG ratings and overall ESG scores from rating providers due to a lack of a commonly agreed definition of ESG.