What does the AFM expect from market parties?

The better the quality of the information entered in the templates, the better equipped investors, pension participants and advisers are to understand products, make comparisons or offer suitable advice. Moreover, such templates offer them greater insight into the substantiation of sustainability claims.

What does the AFM expect from undertakings?

Listed below are the main expectations for 2025 and 2026:

• They have published all required information on their websites.
• They only publish information that is clear and easy to find for investors.
• They publish reliable SFDR information, including information on sustainable characteristics of products, sustainability risks and any negative impact of investments.

Implementation of new regulations and time lines

The SFDR applies with effect from 10 March 2021. The secondary legislation, known as the Regulatory Technical Standards (RTS), applies with effect from 1 January 2023. On 25 July [2022], the final secondary legislation (RTS) was published in the Official Journal of the EU.

During the period from 10 March 2022 to 1 January 2023, there were no legally binding regulations on implementation yet in respect of all SFDR requirements. In this respect, the European Commission indicated in a letter of 20 October 2020 to the European supervisory authorities that it does expect the financial sector to comply at least with the main points of the SFDR requirements by the effective date of 10 March 2021.

Since 10 March 2021, therefore, market parties must comply with the main points of the requirements pursuant to the SFDR. The AFM also expects market parties to start making the necessary preparations for compliance with the SFDR RTS.

The European Commission’s letter states that the draft RTS, as published on 4 February 2021 and on 22 October 2021, could serve as the basis for the preparations in the run-up to the entry into force of these technical standards on 1 January 2023 (relevant for Articles 4, 8, 9 10 and 11 of the SFDR). This is in line with the joint statement of the European Supervisory Authorities on the application of the SFDR during this period between 10 March 2021 and 1 January 2023.

Alignment with the EU taxonomy

A taxonomy has been drawn up at EU level that provides criteria for determining whether an economic activity can be defined as environmentally sustainable, with a view to determining the degree of environmental sustainability of an investment.

Under the SFDR, market parties offering sustainable products must report on the extent to which their investments are in line with this taxonomy. This obligation has been in force since 1 January 2022. Here, too, the secondary legislation that prescribes how this reporting is to take place has applied since 1 January 2023. Please refer to the aforementioned technical standards in this respect.