Reed Smith Client Alerts

The EU Regulation on sustainability (environmental, social and governance (ESG)) disclosures in the financial services sector (the Disclosure Regulation) came into force on 19 December 2019 and will apply from 10 March 2021.

The Disclosure Regulation will require financial market participants (FMPs) and financial advisers (FAs) (see below) to provide investors with certain ESG-related information in relation to certain financial products in order to enable investors to make informed investment decisions based on ESG factors.

Authors: Claude Brown Simon G. Grieser Karen Butler Andrzej Janiszewski Hannah Sheikh Sophie Davis

Who is in scope for the Disclosure Regulation?

The Disclosure Regulation will require certain asset and fund managers, as well as advisers listed in the table below, to comply with the rules on ESG disclosures.

Client Alert 2020-376 Table image 1

The Disclosure Regulation explains that where entities carry out both FMP and FA activities, such entities will be deemed to be FMPs where they act in the capacity of a manufacturer of financial products (e.g. AIFs, UCITS, PEPS or portfolio managers) and will be deemed to be FAs where they provide investment or insurance advice.