Greenwashing will not be tolerated: Correct understanding and compliance of SFDR will benefit funds

Avoid greenwashing and promoting diligence

clock • 3 min read
Kavitha Ramachandran of Maitland Group
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Kavitha Ramachandran of Maitland Group

Driven by European Union regulatory change for financing sustainable growth and reorienting capital flows towards sustainable growth in the financial services sector, the Sustainable Finance Disclosure Regulation (SFDR) – promulgated in 2019 – is a bold step in the right direction to manage financial risk and improve transparency in line with ESG trends.

The SFDR has now become a reality, with EU funds and non-EU AIFs marketed within the EU being obliged, as an initial step, to have updated their prospectuses by 10 March 2021, requiring investment managers to classify their fund product into one of three categories, corresponding to the relevant level of sustainability factors incorporated into their investment decisions. At Maitland, we witnessed an overall awareness from the industry ahead of the 10 March deadline, but what is crucial is that firms understand that the SFDR journey has only just begun. Firms cannot simply have compli...

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