The EU regulation on Sustainability-Related Disclosures (“Disclosure Regulation”)¹ will take effect on March 10, 2021. Its aim is to enhance transparency regarding integration of environmental, social and governance matters (“ESG”) into investment decisions and recommendations. Many of the requirements of the Disclosure Regulation will apply to investment managers that do not focus on ESG mandates.

The Disclosure Regulation forms part of a package of legislative initiatives designed to promote the engagement of financial services providers in building a sustainable economy of the future. These legislative initiatives also include the draft Taxonomy Regulation² which establishes a framework for classifying financial products as “sustainable investments” — a measure directed at tackling so-called “greenwashing” of financial products. Other elements of the package include proposed amendments to MiFID II³, AIFMD and UCITS⁴ that will require asset managers to integrate ESG considerations into their organisational and operational controls, and risk management processes.