Communication on regulatory requirements and fast track procedure in relation to Regulation (EU) 2019/2088 on the sustainability-related disclosures in the financial services sector

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New regulatory requirements on transparency with regard to the integration of sustainability risks, the consideration of adverse sustainability impacts and the provision of sustainability-related information. 



Regulation (EU) 2019/2088 of 27 November 2019 on sustainability-related disclosures in the financial services sector (“SFDR”) requires investment fund managers of undertakings for collective investment in transferable securities and alternative investment funds to comply with harmonised rules on transparency with regard to sustainability risks and the consideration of adverse sustainability impacts and the provision of sustainability-related information.


As outlined in the CSSF Communiqué dated 6 November 2020, all application dates under SFDR are being maintained although the related Regulatory Technical Standards have not yet been published. IFMs will need to comply with the high-level principle-based requirements as laid down in the SFDR by 10 March 2021 where this is required under SFDR.


The SFDR definition of financial products includes funds. Article 6 of SFDR requires that IFMs will need to disclose how sustainability risks are integrated in their investment decisions as well as assess and disclose what could be the likely impact of such risks on the returns of a given fund. The sustainability risk assessment approach and related disclosures feed into UCITS prospectus, respectively are made available to AIF investors in accordance with Article 6 (3) (a) SFDR. Where the IFMs’ sustainability risk assessment leads to the conclusion that there are no sustainability risks deemed to be relevant for a given fund, the reasons should be explained in UCITS prospectus respectively be made available to AIF investors in accordance with Article 6 (3) (a) SFDR.


IFMs are further required to put in place adequate disclosures in UCITS prospectus respectively inform AIF investors by 10 March 2021 in relation to Article 7(2) SFDR when such managers do not consider adverse impacts of investment decisions on sustainability factors for a given fund.


In relation to funds qualifying as financial products as defined by SFDR that either promote, among other characteristics, environmental or social characteristics, or a combination of those characteristics according to Article 8 SFDR or funds that do have sustainable investment as their objective according to Article 9 SFDR, UCITS prospectus may also need to be modified respectively AIF investors informed in accordance with the provisions of SFDR.


Such update of disclosures requires a prior categorisation of the fund with respect to Article 8 or 9 SFDR where applicable and related disclosures, including the fund name, should not mislead end-investors by excessively disclosing on the way in which sustainability is given effect in the investment policy of a given fund.


The integration of sustainability risks must also be ensured at the level of the IFM risk management policy.


In this context and in order to comply with the SFDR, IFMs shall assess their situation in respect to the new disclosure obligations, plan and implement the update of the UCITS prospectus by submitting to the CSSF by 28 February 2021 at the very latest an updated prospectus/issuing document version for visa stamp. For AIF investors, such information should be made available in accordance with Article 6 (3) (a) SFDR. IFMs should also assess their compliance with the requirements related to the publication of information on the websites and to the update of policies and processes related to sustainability risks. Adequate measures must be taken in case of gaps. The related disclosures relate mainly to the sustainability risk policies, the investment decision-making process, the adverse sustainability impacts as described under Article 4 SFDR and the remuneration policies. To ensure the reliability of information published on the websites, it is imperative that such information is kept up to date.



Implementation of a SFDR fast track procedure to support the visa stamping of a fund prospectus/issuing document after update for SFDR

In relation to UCITS, disclosures required under Article 6 (3) (g) SFDR and, if applicable, Articles 7, 8 and/or 9 SFDR are to be disclosed in UCITS prospectus.


In order to comply with SFDR, UCITS management companies as defined in Article 2(10) SFDR will have to assess their situation in respect to the new disclosure obligations and submit to the CSSF, for each Luxembourg UCITS managed by them, an updated UCITS prospectus (including all the requested disclosures) by 28 February 2021.


Starting on 16 December 2020, the CSSF implements a specific SFDR fast track procedure to facilitate the submission of the prospectus/issuing document updates to the CSSF. In order to benefit from this fast track procedure, updates must be limited to reflect changes required under SFDR. In case modifications to the investment policy and restrictions are material according to CSSF Circular 14/591, the use of the fast track procedure is not available.


The said fast track procedure will also be available for AIFMs updating prospectus/issuing document of AIFs under the form of SIFs and Part II UCIs.


In order to benefit from this fast track procedure, each updated prospectus/issuing document submitted for visa stamp will have to be accompanied by a confirmation letter. A template of the said confirmation letter is available on the CSSF website.


Practically, the fast track procedure for prospectus/issuing document updates will be operated as follows:

  • For sake of harmonisation and simplification, a conformity confirmation of the prospectus/issuing document update as well as upgrade of IFM policies/processes with SFDR is requested to be evidenced, under the ultimate responsibility of the IFM/fund, by means of a confirmation letter downloadable from the CSSF website duly signed by at least one representative of either the UCITS Management Company, the investment company which has not designated a management company, the AIFM or the legal advisor or another representative of the IFM or the fund.
  • The professional duly appointed to submit the updated prospectus/issuing document version for visa stamping by the CSSF must upload the document in clean version, in accordance with CSSF Circular 19/708 relating to the electronic transmission of documents to the CSSF alongside with the said confirmation letter duly filled out and merged with the updated prospectus/issuing document in track change version. Where a notice is foreseen to inform investors on prospectus/issuing document update, this notice shall also be uploaded and submitted as letter.
  • Upon satisfactory acceptance by the CSSF, the prospectus/issuing document will be visa stamped and returned through the e-file/Sofie channel. Unsatisfactory filing will result in the return of a notice though e-file/Sofie requesting the filing of a new revised prospectus/issuing document version.