ESG and Sustainable Finance – CSSF issues communication on SFDR and fast track procedure

Of relevance to all  Luxembourg IFMs, UCITS and regulated AIFs.

On 16 December 2020, the CSSF issued its communication (available here) on how it intends to deal with the Sustainable Finance Disclosure Regulation  (EU) 2019/2088 (“SFDR”), which will become applicable in large part on 10 March 2021. Most notably, the CSSF provides details in its communication on the fast track procedure for updating prospectuses/offering documents and the confirmation letter that will need to accompany it (available here).

The CSSF reiterates that, in the absence of the relevant Regulatory Technical Standards (the “Level 2” SFDR implementing measures), investment fund managers (“IFMs”) and their funds will need to comply with the “high-level principle-based requirements” of SFDR by 10 March 2021.

In order to ensure the review and approval by the CSSF on the proposed SFDR changes by 10 March 2021, all UCITS prospectuses and AIF offering documents (in respect of SIFs and UCI part II funds) must be filed for visa, together with the confirmation letter, by 28 February 2021 at the latest.

IFMs are reminded in the communication that they must assess their compliance with SFDR in respect of the website disclosure requirements and their policies and processes regarding sustainability risks.

The CSSF’s fast track procedure is already open and will remain available until 28 February 2021 through the CSSF e-file platform. Only necessary changes to the investment objective and policy to reflect the requirements of SFDR will be permitted for the fast track procedure. Although “editorial adjustments” will be acceptable, any material changes in line with CSSF circular 14/591 will not and will have to follow the normal CSSF filing procedure.

Under the responsibility of the IFM/the fund, representatives of the fund or the IFM or their legal advisors are able to sign the confirmation letter accompanying the fast track submission.

SFDR compliance will need to be confirmed in respect of the prospectus/offering document and website disclosure requirements but also in respect of the policies and procedures. It will also need to be confirmed that the Risk Management Policy has been updated or will be updated by 10 March 2021 in order to integrate sustainability risks.

Please be reminded that we have published an interactive compilation of the SFDR which is available on our website.