On 6 April 2022, the European Commission adopted a Delegated Regulation (together with five annexes) containing regulatory technical standards (RTS) for disclosures of sustainability-related information under the Sustainable Finance Disclosures Regulation (SFDR). The RTS specify the content, methodology and presentation of the information to be disclosed, thereby improving its quality and comparability. It also supports the policy objective of reducing the occurrence of greenwashing and encourages the EU financial system’s transition towards a sustainable economy.

The Delegated Regulation has five chapters:

• Chapter 1 – general provisions.
• Chapter 2 – covers reporting on entity-level principal adverse impacts by specifying the content, methodology and presentation of the information required by Article 4(1) to (5) of the SFDR for the sustainability indicators on (i) adverse impacts on the climate and other environment-related adverse impacts and (ii)  adverse impacts in the field of social and employee matters, respect for human rights, anti-corruption and anti-bribery matters. The RTS require a mandatory reporting template, set out in Annex 1, for the statement on the consideration of principal adverse impacts of investment decisions on sustainability factors.
• Chapter 3 – covers pre-contractual product disclosures by setting out the details of the content and presentation of the information to be disclosed at pre-contractual level in the sectoral documentation referred to in Article 6(3) of the SFDR. Disclosures for financial products referred to in Articles 8(1) to (2a) and 9(1) to (4a) of the SFDR must use templates laid down in Annexes 2 and 3, and specify how the environmental or social characteristic (or combination thereof) or the sustainable investment objective is achieved. For financial products making sustainable investments, chapter 3 also lays down requirements on compliance with the ‘do not significant harm’ principle referred to in Article 2, point (17), of the SFDR in relation to the principal adverse impact indicators in Annex 1.
• Chapter 4 – sets out rules on website disclosures on financial products referred to in Articles 8(1) to (2a) and 9(1) to (4a) of the SFDR. It sets out the details of the content and presentation of the information that financial market participants must publicly disclose on their website for these financial products. The chapter lists items to be included in the disclosure, focusing on the methodology and any screening criteria employed and the data sources used, and where and how the financial market participants publish the information on the website, including the need to publish a two-page summary.
• Chapter 5 – lays down rules on product-level periodic disclosures by financial products referred to in Articles 8(1) to (2a) and 9(1) to (4a) of the SFDR in the sectoral documentation referred to in Article 11(2) of that Regulation. The disclosures use mandatory templates laid down in the Annexes 4 and 5.

The Delegated Regulation will now be subject to scrutiny by the European Parliament and the Council. It is scheduled to apply from 1 January 2023.