ESG Regulation in the E.U.

On March 10, 2021, new disclosure obligations for asset managers came into force under the E.U.’s Sustainable Finance Disclosure Regulation (SFDR). Although some uncertainties remain as to the precise scope of the new regime, it is generally accepted that U.S. and other non‑E.U. asset managers are subject to the SFDR with respect to any funds that they have registered for marketing under the E.U. Alternative Investment Fund Managers Directive national private placement regime. This guest article by Sidley attorneys Leonard Ng and Matt Feehily explains how the SFDR applies to U.S. asset managers, sets out the key action points for U.S. asset managers that fall within the SFDR’s scope, discusses some common approaches to the disclosures taken to date and highlights remaining areas of uncertainty for U.S. asset managers with non‑ESG funds. Comments about U.S. asset managers apply equally to U.K., Asian and other non‑E.U. managers. For more on the SFDR, see “Navigating the Evolving Legal and Regulatory ESG Investing Terrain (Part Two of Two)” (Dec. 10, 2020).

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