MFSA published a circular that provides details on the application of the Sustainable Finance Disclosure Regulation (SFDR), following the supervisory statement from ESAs on February 25, 2021. ESAs had issued the final report on draft regulatory technical standards on SFDR disclosures for financial market participants on February 04, 2021. In this recent statement, ESAs recommended that the draft regulatory technical standards should be used as a reference when applying the provisions of SFDR in the interim period between the application of SFDR (as of March 10, 2021) and informed about the expected finalization of the regulatory technical standards at a later date (proposed date of January 01, 2022). MFSA encourages financial market participants and financial advisers to use the interim period from March 10, 2021 until January 01, 2022 to prepare for the application of the regulatory technical standards.
In addition, the Annex to the circular provides a summary table of the SFDR and Taxonomy Regulation disclosure obligations on financial market participants, financial advisers, and financial products and the respective timelines. In a separate circular, MFSA informs financial market participants and financial advisers about the recent developments and ongoing work of ESAs in relation to sustainable finance. The legislative sustainable finance package being implemented in EU consists of SFDR, Sustainable Finance Taxonomy Regulation (SFTR), and Sustainable Finance Benchmarks Regulation. The circular notes that MFSA is working on the conceptualization and development of a strategy for sustainable finance for Malta, with a view to publishing a concept paper in the near future.
Article 8 of SFTR requires undertakings that fall within scope of application of the Non-Financial Reporting Directive (NFRD) to include information in their non-financial information statements on activities. The circular highlights that, on June 01, 2021, EC will adopt a delegated act to specify the content and presentation of the information to be disclosed pursuant to Article 8 of the SFTR. On January 01, 2022, Article 8 will become applicable with regard to reporting by public interest companies designated under the NFRD on the first two environmental objectives—climate mitigation and climate adaptation specified under Article 3 of the SFTR. Additionally, on January 01, 2023, Article 8 becomes applicable with regard to reporting by public interest companies designated under the NFRD to the other four environmental objectives—water, pollution and control, circular economy, and biodiversity specified under Article 3 of the SFTR.
- Circular on Application of SFDR (PDF)
- Annex on Timeline for SFDR and Taxonomy Regulation (PDF)
- Joint Statement of ESAs (PDF)
- Circular on ESAs Work on Sustainable Finance (PDF)
Keywords: Europe, Malta, Banking, Insurance, Securities, SFDR, NFRD, SFTR, Taxonomy Regulation, Regulatory Technical Standards, Disclosures, Sustainable Finance, ESG, Climate Change Risk, ESAs, MFSA
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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