Regulation – SFDR will have a ‘significant impact’ on asset managers

Arun Sarwal, general manager for fund communication solutions, Broadridge, says SFDR will have a “significant impact” on asset managers.

As part of its coverage of Sibos 2022 in Amsterdam, Funds Europe reached out to financial experts on key topics at the conference. Read more analysis here.

Can you highlight a piece of regulation at the European level that is most impactful for asset managers in terms of their technology governance or development?

“The Sustainable Finance Disclosure Regulation (SFDR) is a European regulation introduced to improve transparency in the market for sustainable investment products and to increase clarity around sustainability claims made by financial market participants.

“It will have a significant impact on asset managers as they will be required to disclose how ESG factors are adopted in their decision-making process. SFDR requires that the main body of the prospectus and annual report of a fund must include a prominent statement to the effect that the relevant sustainability information is appended in an annex for Article 8 and Article 9 funds. There are four disclosures that will need to be considered: Pre-contractual, Periodic, Website and a Principal Adverse Impact statement.

“The key difficulty facing asset managers will be how to consistently collect this data, ensure its validity and distribute it to the relevant endpoints. Significant consideration will be the benefits of working with a service provider who can provide an end-to-end solution with flexible distribution channels, especially if they can leverage the data for reuse in other ESG products such as EET (European ESG Template). Quick and accurate translation of SFDR disclosures will also require the close attention of asset managers.”

© 2022 funds europe

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