New disclosure obligations for asset managers recently 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. Specifically, the SFDR applies even when the funds being marketed by an asset manager do not pursue any particular sustainability objectives, so the SFDR applies more widely than to just environmental, social or governance (ESG) focused funds. Of course, in view of the SFDR’s underlying policy objective to combat so-called “greenwashing,” firms with funds that do seek to promote environmental or social characteristics, or that have sustainable investment objectives, are subject to significantly more detailed disclosures under the SFDR. In a guest article, Leonard Ng and Matt Feehily, partner and senior associative, respectively, at Sidley Austin, explain how the SFDR applies to U.S. asset managers, set out the key action points for U.S. asset managers that fall within the SFDR’s scope, discuss some common approaches to the disclosures taken to date and highlight 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).