Central Bank of Ireland to accelerate approvals of fund updates ahead of SFDR changes

Central Bank of Ireland, The Central Bank of Ireland (CBI) is accelerating the approval process of updates to fund documents as investment managers prepare to meet SFDR level 2 requirements.

Last month the European Supervisory Authorities (ESAs) called on the European Commission to provide clarity on certain aspects of the regulation, as asset managers scrambled to change their fund documents ahead of the deadline.

The European Commission has yet to clarify its queries. 

The implementation of the second phase of SFDR was delayed six months by the European Union last year due to the extent of the directive’s technicality.

Gayle Bowen, partner at law firm Pinsent Masons, said: “Managers now need to prepare for the December deadline as a matter of urgency. The Central Bank has indicated that it will conduct inspections of disclosures and will expect managers to have considered and adopted the Level 2 measures.”

“Funds will need to be able to stand over any statements made in their offering documents.”

Asset managers must submit amendments to the central bank by 1 December. The next level of SFDR will be introduced in January.

ESA queries related to how the definition of “sustainable investments” under Article 2 of SFDR will be applied to companies that do not detail use of proceeds.

Level 2 obligations require companies to report on 18 mandatory principle adverse impacts and voluntary areas on risks to a products’ valuation due to environmental harm.

The Central Bank of Ireland informed Funds Europe that it’s facilitating a streamlined filing process for investment funds making amendments to certain disclosure updates required under the EU’s Sustainable Finance Disclosures Regulation (SFDR) Level 2.

Those requirements come into effect on 1 January.

It added that it would be undertaking a review of a sample of the submissions received and engage with applicants on a bilateral basis if queries arise in respect of the applications that fall within the sample. 

“This approach is consistent with the approach of the Central Bank previously in relation to other Taxonomy-related documentation changes and aligned with the approach taken by other regulatory authorities.” 

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