On 14 September 2021, the Dutch Authority for Financial Markets (Autoriteit Financiële Markten, the AFM) published a report on the implementation of the Sustainable Finance Disclosure Regulation (the SFDR) by Dutch funds (Rapport Implementatie SFDR, the Report). The SFDR has been applicable since 10 March 2021 and contains requirements for the disclosure of Environmental, Social and Governance (ESG) factors.

The Report is the result of a survey among Dutch fund managers conducted by the AFM. The results of the survey give insight into the sustainability classifications of funds and the amendments that have been made to the prospectuses by fund managers. For a selection of the funds, the AFM has assessed whether these comply with the SFDR’s requirements. In the Report, the AFM shares its findings so that fund managers can improve the disclosure of ESG factors where necessary.

The survey has shown that all fund managers that have indicated that their fund has either sustainable characteristics or sustainable objectives, have included information about this in the prospectus. For a significant part of the selected funds, the AFM questions the sustainability classification used. In addition, the AFM sees room for improvement with regard to the quality of the information provided in the prospectus. In particular, the AFM mentions the following areas for improvement:

• The integration of sustainability risks in the investment policy. This information is often too generic and not specific to the fund. Managers should describe the effects in a precise way and focus on the impact for the fund.
• The description of the implementation of the transparency obligations in Article 8 or 9 of the SFDR. This information often lacks depth and could be more specific. Funds that have sustainable investment as its objective often lack a sufficiently specific description of this sustainable objective. Also for funds that have sustainable characteristics, the fund manager should provide a concrete description of the ESG characteristics that the fund aims to promote.
• The objective of the funds is too broadly formulated. The AFM notes that funds that have the objective to make sustainable investments, often have an objective that is broader than sustainable investments and an investment portfolio that does not focus exclusively on sustainable investments. The AFM expects managers of these funds to explain how the (underlying) investments fall within the definition of sustainable investments as defined in Article 2 (17) of the SFDR.

The AFM acknowledges that there are still some uncertainties regarding the implementation of the SFDR, given that the requirements have only been applicable since March and that Q&As from the European Commission on the Regulation have only been published recently. In addition, a definitive version of the regulatory technical standards (RTS) in relation to the SFDR have not yet been published. Notwithstanding this, the AFM states that in its supervision of fund managers it will take into account the extent to which the Report’s findings have been taken up.

The Report is available here (Dutch only).