Other national legislation

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Belgium introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

No, there is as yet no particular Belgian legislation requiring specific sustainability disclosures for regulated funds and their managers.

That said:

1. The Belgian FSMA published on its website two communications in which it (a) explains its expectations in relation to the implementation of SFDR by Belgian in-scope entities (including some gold-plating to the SFDR requirements)¹ and (b) provides an overview of the legal framework applicable to fund managers².
2. There are a number of soft law initiatives on the Belgian market, such as the sustainability label (“Quality Standard”) developed by the Belgian financial sector federation Febelfin in 2019³.

Who does the legislation apply to (which fund managers, financial products)?

Not applicable.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Not applicable.

What are, in summary, the key requirements of the legislation?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

Not applicable.

What information does a PE/VC firm or fund manager need to make public on its website?

Not applicable.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

Not applicable.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

In Belgium, like in other EU jurisdictions, a number of fund managers are still considering the exact nature and consequences of the required implementation of the SFDR Level 2 provisions (especially in the interim period up until 1 January 2023).⁴

There is currently no indication of how the FSMA will update its SFDR Communication to reflect the final SFDR Level 2 provisions⁵ and how it intends to exercise its supervisory powers in that respect.

1. See: FSMA Communication_2021_06 dated 9 March 2021.
2. See: FSMA Communication_2022_02 dated 14 December 2021.
3. See: FEBELFIN, A quality standard of sustainable and socially responsible financial products, February 2019. An overview of the funds that obtained the label is available on the following website: https://www.towardssustainability.be.
4. Please note that on 25 July 2022 the Delegated Regulation 2022/1288 was published, which comprises the final SFDR Regulatory Technical Standards (“RTS”).
5. See: FSMA Communication_2021_06 dated 9 March 2021.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has the Czech Republic introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

Not applicable.

The Czech legislation is governed by the NFRD and is primarily incorporated into the Czech Accounting Act.

In the Czech business environment, the legislation on non-financial reporting applies only to circa the 30 largest companies in the Czech Republic.

Who does the legislation apply to (which fund managers, financial products)?

The legislation does not apply to PE/VC funds directly, but applies to:

1. listed companies, banks, insurance companies, pension companies and health insurance companies if they have more than 500 employees; or
2. parent companies of groups with more than 500 employees, which are also listed companies, banks, insurance companies, pension companies and health insurance companies.

The legislation does not apply to specific financial products with regard to PE/VC funds.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

No.

What are, in summary, the key requirements of the legislation?

The main purpose is to increase the comparability of non-financial information within the European Union. The information relates to the following matters:

• environment;
• social and employment;
• human rights;
• combating corruption and bribery.

The structure of the non-financial report is as follows:

• a description of the business model with non-financial information;
• a description of measures taken with regard to ESG, risks and results;
• non-financial performance indicators relating to the relevant business activity.

For relevant entities (see above), a non-financial report is usually an obligatory part of the annual financial statements. Alternatively, it may form a separate document. There are no standard guidelines; however, existence of the non-financial report is controlled by auditors (content is not audited).

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

See above.

What information does a PE/VC firm or fund manager need to make public on its website?

If the non-financial report forms a separate document (see above), it needs to be published on the company’s website no later than 6 months of the balance sheet day (closing date).

Is there any other information that a PE/VC firm or fund manager needs to disclose?

No.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

No.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Denmark introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

No.

However, the Danish rules implementing the NFRD are in some respects more comprehensive than the European requirements:

1. Companies belonging to account classes C (companies with a certain turnover, balance sum and number of employees (could be less than 500)) and D (listed companies and public limited companies) are covered by the Danish rules implementing the NFRD. Thus, companies belonging to account classes C and D are obliged to report even if such companies are not otherwise in the public interest or have had an average of 500 employees during the accounting year.
2. In addition to what is required by the NFRD, the company must provide information on its climate impact reduction policies if such policies exist (e.g., a policy for the use of renewable and/or non-renewable energy sources as well as the company's greenhouse gas emissions).
3. The company shall disclose how they expect to continue to work with their policies on social and environmental issues going forward.
4. The company must account for the method used for factoring in and measuring the non-financial key figures to be provided pursuant to the NFRD.
5. Denmark has decided to implement the possibility of exempting companies from providing information if the disclosure of such information is expected to cause significant harm to the company. However, if the company wants to be exempted, they must state in their accounts for their corporate social responsibility that the company has applied the exemption.

Denmark also supports the Task Force on Climate-related Financial Disclosures (TCFD) initiative. Such support shall merely be considered a statement of support and implies that the Danish government encourages Danish companies to apply the TCFD recommendations. It does not constitute an obligation for Denmark or Danish companies to apply the TCFD.

Who does the legislation apply to (which fund managers, financial products)?

Not applicable.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Not applicable.

What are, in summary, the key requirements of the legislation?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

Not applicable.

What information does a PE/VC firm or fund manager need to make public on its website?

Not applicable.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

Not applicable.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

Not applicable.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Estonia introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did / will it become effective?

No.

Who does the legislation apply to (which fund managers, financial products)?

Not applicable.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Not applicable.

What are, in summary, the key requirements of the legislation?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

Not applicable.

What information does a PE/VC firm or fund manager need to make public on its website?

Not applicable.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

Not applicable.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

Not applicable.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Finland introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

No. Finland has no national legislation governing or affecting PE/VC firms’ non-financial reporting obligations in addition to SFDR, CSRD and other pan-EU regulatory initiatives.

The NFRD was implemented into Finnish law in 2016 and SFDR in 2020 (entered into force in 2021).

The Finnish FSA may impose an administrative fine or penalty payment on anyone who fails to comply with or violates the provisions of SFDR as provided under the Finnish Act on the Financial Supervisory Authority.

As for the future, the possibility of enacting a national law on corporate social responsibility has been assessed, but no progress has been made since a memorandum published by the Ministry of Economic Affairs and Employment in spring 2022. It currently seems unlikely that the project will lead to any further legislation.

Other than that, no further national legislation is in the pipeline.

Who does the legislation apply to (which fund managers, financial products)?

Not applicable.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Not applicable.

What are, in summary, the key requirements of the legislation?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

Not applicable.

What information does a PE/VC firm or fund manager need to make public on its website?

Not applicable.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

Not applicable.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

Not applicable.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has France introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

1 - The French legislative framework has included a regulatory framework for ESG transparency of investors (most notably on climate change) since 2015: Article 173-VI of the French Energy Transition for Green Growth Act required systematic disclosure of the ways in which ESG criteria are taken into consideration in investment policies and risk management procedures, while encouraging financial actors to factor in climate-related risks.

2 - Energy and Climate Law n° 2019-1147 of 8 November 2019 (Article 29) - Sequenced implementation:

• 10 March 2021: integration of climate change risks and biodiversity risks into the sustainability risk disclosure;
• 1 January 2022: application of most provisions for 2022 reporting (for the year 2021);
• 1 January 2023: rest of the provisions for 2023 reporting (for the year 2022): Taxonomy alignment and fossil fuels, climate change and biodiversity specificities in risk management, continuous improvement plan.

For more information, please click here.

3 - Implementing Decree relating to the Energy and Climate law of 7 May 2021 (implementing Article L.533-22-1 of the Monetary and Financial Code) - Sequenced implementation:

• 1 January 2022: 2022 reporting for the year 2021: sections 1° to 4° and 6° to 8°;
• 1 January 2023: 2023 reporting for the year 2022: all sections.

For more information, please click here.

4 - AMF Position-Recommendations 2020-03: Adopted in 2020, effective on 27 January 2021 (new products), 10 March 2021 (products existing as of 11 March 2020).

For more information, please click here.

Who does the legislation apply to (which fund managers, financial products)?

1 - The Energy and Climate Law sets a target of reducing fossil fuel consumption by 40% by 2030, as compared to 2012 (previously 30%). Moreover, the law introduces a number of provisions to address buildings with high heat loss.

Article 29 of the Energy and Climate Law requires specific disclosure and reporting in connection with biodiversity risks and risks related to climate change.

It applies to entities in the financial sector (insurance, banking, asset management for the activities of collective management, discretionary portfolio management and investment advice).

Additional requirements apply to funds and discretionary portfolios with AuM> 500 million EUR.

2 - Implementing Decree:

• Point 1° applicable to all entities in scope;
• Points 2° to 5° applicable to any entity > 500 m€ balance sheet or AuM;
• Points 6° to 9° applicable to any entity and any fund/discretionary portfolio > 500 m€.

3 - The AMF Position-Recommendations 2020-03 apply to retail funds domiciled in France and abroad which are distributed in France (e.g. FCPI, FIP, FCPR) and which show extra-financial criteria in their regulatory (KID, prospectus, regulations, articles of association, etc.) and marketing documentation.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

France was among the first countries in the world to enshrine in law the standard of the Paris global warming agreement (Zero net emissions by 2050).

What are, in summary, the key requirements of the legislation?

1 - The Energy and Climate Law provides for the integration of climate change risks and biodiversity risks into the sustainability risk disclosure and, where appropriate, the non-financial reporting under NFRD. It requires the publication on the company’s website of a dedicated report for entities and their funds/discretionary portfolios concerned, plus an obligation to share these reports with the regulators and ADEME (“Agence de l'environnement et de la maîtrise de l'énergie”, also known as “Agence de la transition écologique”).

2 - The Implementing Decree details, clarifies and strengthens sustainability-related financial disclosures for market players. It contributes to greening the financial system as it supplements existing European legislation in three complementary areas: (i) climate, (ii) biodiversity, and (iii) the integration of ESG factors in governance and risk management of financial institutions.

3 - AMF Position 2020-03 sets out information on the consideration of non-financial criteria that French collective investment undertakings and foreign UCITS authorised for marketing in France may disclose. These provisions are described for the various regulatory documents (key investor information documents, prospectus) and marketing materials. It adds classification and transparency requirements to investors in addition to those imposed by the Disclosure Regulation.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

AMF Position-Recommendations 2020-03 add classification and transparency requirements to investors in addition to those imposed by the Disclosure Regulation.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

1 - The Implementing Decree requires to disclose the consideration of ESG criteria (website + dedicated annual report). Companies should disclose:

• A summary of their ESG approach
• The content, frequency and means of information to investors
• A list of funds/discretionary portfolios classified as Article 8 or 9 as well as the ratio ESG AUM/total AUM (in %)
• Consideration of ESG criteria in the decision-making process for the allocation of new management mandates by insurers and reinsurers
• Membership of the asset management company/funds/discretionary portfolios in ESG charters/codes/initiatives/labels, and their short description

2 - In addition, the Implementing Decree requires asset management companies, funds and discretionary portfolios with AUM > 500 million EUR to disclose: internal resources, governance, engagement strategy, Taxonomy alignment (with focus on fossil energy), alignment strategy on the Paris Agreement and low carbon strategy, alignment on biodiversity, risk management, measures for continuous improvement.

3 - AMF Position-Recommendations 2020-03 add classification and transparency requirements to investors in addition to those imposed by the Disclosure Regulation.

What information does a PE/VC firm or fund manager need to make public on its website?

1 - Article 29 of the Energy and Climate Law requires entities to add a section on risks related to climate change and biodiversity in the entity’s Policy on Sustainability Risk Management which is published on their website (applicable from 10 March 2021).

2 - The Implementing Decree requires to disclose the consideration of ESG criteria (website + dedicated annual report). Companies should disclose:

• a summary of their ESG approach
• the content, frequency and means of information to investors
• a list of funds/discretionary portfolios classified as Article 8 or 9 as well as the ratio ESG AUM/total AUM (in %)
• consideration of ESG criteria in the decision-making process for the allocation of new management mandates by insurers and reinsurers
• membership of the asset management company/funds/discretionary portfolios in ESG charters/codes/initiatives/labels, and their short description.

3 - In addition, for asset management companies, funds and discretionary portfolios with an AUM > 500 million EUR, the Implementing Decree requires to disclose: internal resources, governance, engagement strategy, Taxonomy alignment (with focus on fossil energy), alignment strategy on Paris Agreement and low carbon strategy, alignment on biodiversity, risk management, measures for continuous improvement.

4 - AMF Position-Recommendations 2020-03 add classification and transparency requirements to investors in addition to those imposed by the Disclosure Regulation.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

For firms which perform a reporting under NFRD, elements relating to the sustainability risk policy should be integrated (i.e. implementation of the policy of sustainability risks, including in particular a specific section on risks related to climate change and biodiversity risks).

For more information, please refer to France Invest’s guide.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

No significant implementation challenge has been identified at this stage. The regulation currently in place enhances obligations that were already in existence. This section is expected to be updated at a later stage.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Germany introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

In 2021, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - “BaFin”) published an 8-page draft Directive on retail sustainable investment funds (BaFin-Konsultation 13/2021 - “Draft Directive”). With the Draft Directive, BaFin aims to create clarity and therefore specifies, among other things, when an investment fund may be designated/marketed as "sustainable" in order to prevent investors from being misled by greenwashing. The Draft Directive is based on Section 4(1) and (2) of the German Investment Code (KAGB), which explicitly empowers BaFin to issue further guidance on the denomination and categorisation of public investment funds.

The Draft Directive is currently in the consultation phase. The relevance of the Draft Directive for private equity and venture capital is limited because it is directed to German public investment funds only, i.e. funds which are open for investment by retail investors. As a consequence, it does generally not apply to German private equity and venture capital funds which are usually “Special” AIFs. Special AIFs are AIFs which can only admit semi-professional and professional investors.

Who does the legislation apply to (which fund managers, financial products)?

The Draft Directive is product-based and applies to domestic public investment funds designated or marketed also to retail investors as sustainable. This is deemed to be the case for a fund that has a name component suggesting sustainability (e.g., such funds that use the terms "ESG", "sustainable" or "green" as part of their name). In the case of a fund marketed as sustainable, it must be examined whether sustainability is the primary emphasis.

Special AIFs, EuVECA funds and EuSEF funds remain out of the scope of the Draft Directive.

If it is determined that a fund falls within the scope of the Draft Directive, certain requirements are set for the respective fund manager. These requirements of the Draft Directive apply independently of the sustainability-related disclosure obligations arising from Regulation (EU) 2019/2088 ("SFDR") and Regulation (EU) 2020/852 ("Taxonomy Regulation").

Grandfathering rule: The Draft Directive provides that the requirements do not apply to those domestic public investment funds whose investment conditions have already been approved at the time of publication of the consultation version.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Not applicable.

What are, in summary, the key requirements of the legislation?

The Draft Directive allows the designation as a sustainable investment if (at least) one of the following three criteria is met:

1 - Sustainable investment fund based on investment in sustainable assets

According to the Draft Directive, the designation as a sustainable investment fund or corresponding marketing can be justified if the fund invests at least 75% of its assets in sustainable investments. It must then be specified in the investment conditions what is considered a sustainable investment (based on the definition in Article 2 (17) of the SFDR).

In addition, certain minimum exclusions must ensure (i) that a significant contribution is made to the achievement of one or more environmental or social objectives, (ii) that at the same time there is no significant harm to environmental or social objectives, and (iii) that certain governance aspects are taken into account (cf. Article 2 (17) of the SFDR).

2 - Sustainable investments based on a sustainable investment strategy

In addition to sustainable investments, sustainability of the investment fund within the meaning of the Draft Directive can also be achieved by pursuing a sustainable investment strategy (e.g., "Best-In-Class Strategy"). The structure of the sustainable investment strategy must be described in more detail in the investment conditions. In addition, it must be ensured via maximum limits that certain environmental and social objectives are not significantly impaired and that certain governance aspects are taken into account.

3 - Replication of a sustainable index

If, according to the investment terms and conditions, a sustainable index is tracked as part of a passive investment strategy, more detailed information on the sustainability character of this index is required. Furthermore, it must be ensured via maximum limits that certain environmental and social objectives are not significantly impaired and that certain governance aspects are taken into account.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

If the German PE/VC fund is a fund marketed also to retail investors and established as a sustainable investment fund within the meaning of the Draft Directive, compliance with the requirements outlined above must be reflected not only in its sales documents, but also in the investment conditions.

That said, most private equity and venture capital funds would not qualify as public funds as they are limited to professional and semi-professional investors or fall under the EuVECA regime.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

Not applicable. [At this point, the Draft Directive does not provide specific information with regard to reporting/disclosure obligations.]

What information does a PE/VC firm or fund manager need to make public on its website?

Not applicable. [At this point, the Draft Directive does not provide specific information with regard to reporting/disclosure obligations.]

Is there any other information that a PE/VC firm or fund manager needs to disclose?

Not applicable. [At this point, the Draft Directive does not provide specific information with regard to reporting/disclosure obligations.]

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

At the annual press conference in May 2022, BaFin postponed the final adoption of the Draft Directive indefinitely due to the war in Ukraine and its repercussions. However, BaFin announced that it will adhere to the consultation version from August 2021 and will apply the principles of the Draft Directive (see above) in the authorisation procedure for sustainable investment funds. This decision was largely criticised due to the lack of legal certainty.

Moreover, the content of the Draft Directive was criticised harshly. While a previous draft required 90% of a public fund’s assets to be made in sustainable investments, this has now been lowered to 75%. The 75% hurdle is still criticised as being too high, as it is feared that Germany will not be able to establish itself as a fund location for sustainable investment products as other locations with lower requirements may appear to be more attractive. Other points of criticism were that the Draft Directive would hinder cross-border fund marketing, lead to increased fragmentation and that it would partly contradict the European requirements. Moreover, it was mentioned that there were no apparent reasons for a stricter national regulation, as there was no evidence of widespread greenwashing in the German market compared to other European countries. Yet, BaFin has not indicated plans to further amend the Draft Directive.

It also remains to be seen to what extent the recently published (25 July 2022) Level II Regulation (EU) 2022/1288 will have an impact on BaFin's Draft Directive.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Hungary introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

The NFRD was implemented into Hungarian law in 2016. The rules have been mostly incorporated into the Act C of 2000 on Accounting (Accounting Act).

The Vice President of the Hungarian National Bank issued a Circular regarding sustainability disclosures in the financial services sector (SFDR) on 17 March 2021 (Circular).

The Hungarian National Bank also issued the Recommendation No 5/2021 (IV.15.) on climate change and environmental risks and the environmental sustainability considerations, but it applies to credit institutions and not to the PE/VC industry.

The Budapest Stock Exchange published its ESG Reporting Guide in spring 2021. The aim of the Guide is to help listed companies to improve their ESG reporting and disclosure practices.

Who does the legislation apply to (which fund managers, financial products)?

The Accounting Act requires large undertakings which are public-interest entities to disclose non-financial information in their annual report.

According to Section 95/C(1) of the Accounting Act, large companies which are public-interest entities and for which:

1. on the balance sheet date in the previous two consecutive financial years either two of the following three indices exceed the following limit:
   1. the balance sheet total exceeds 6,000 million HUF;
   2. the annual net turnover exceeds 12,000 million HUF;
   3. the average number of employees in the financial year exceeds 250 persons; and
2. the average number of employees in the given financial year exceeds 500 persons;

shall publish a non-financial statement containing information to the extent necessary for an understanding of the company’s development, performance, position and impact of its activity, relating to, as a minimum, environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters.

The Circular applies to the same actors as the SFDR, e.g. AIFMs.

The Accounting Act does not apply to specific financial products with regard to PE/VC funds.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

No.

What are, in summary, the key requirements of the legislation?

The non-financial statement according to the Accounting Act shall at least contain:

1. a brief description of the company’s business model;
2. a description of the policies pursued by the company in relation to environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters, including implemented due diligence processes;
3. the outcome of the policies;
4. a description of the principal risks related to those matters linked to the company’s operations including, in particular, its business relationships, products or services in relation to environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters, which are likely to cause adverse impacts in those areas, and a description of how the company manages those risks;
5. non-financial key performance indicators relevant to the particular business.

Based on the Circular, electronic disclosures shall be in searchable (OCR) format. The Hungarian National Bank considers it good practice for SFDR-related disclosures on the website to be in a dedicated sustainability subsection, as this will make it easier for investors to access, review and understand the sustainability aspects.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

The Hungarian legal provisions do not expressly set out any information, which PE/VC firms or fund managers need to disclose in their pre-contractual reports.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

See above.

What information does a PE/VC firm or fund manager need to make public on its website?

The Circular suggests the following sustainability risks as a minimum to be covered by the sustainability risk policies according to Article 3 SFDR:

• physical risks of climate change; and
• the transition risk associated with climate change.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

Not applicable.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

Not applicable.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Ireland introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

No specific national rules governing or affecting PE/VC firms' non-financial reporting obligations have been introduced in Ireland. However, Irish incorporated companies (including investment companies) are required under section 327 of the Companies Act 2014 (as amended) to include in the financial statements a directors' report which must include a business review of the company taking account, if appropriate, of non-financial key performance indicators, including information relating to environmental and employee matters.

The Central Bank of Ireland (Irish financial regulator) issued correspondence to Chairs and CEOs of Irish regulated financial service providers/RFSPs (including AIFMs and internally managed AIFs) in November 2021 confirming its expectation that:

• RFSPs comply with their disclosure obligations under the ESG/sustainability-related pan-EU regulatory initiatives including disclosing information and data on the climate-related risks to which the RFSP may be exposed, the potential impact of those risks on financial and operational resilience and how the RFSP plans to manage and mitigate such risks;
• RFSPs are responsible for providing disclosures to their clients and customers on climate and other sustainability/ESG risks and where relevant the impacts of investment products; and
• RFSPs must ensure that climate and other sustainability/ESG risk disclosures are clear, fair and not misleading.

Who does the legislation apply to (which fund managers, financial products)?

Section 327 of the Companies Act 2014 (as amended) applies generally to Irish incorporated companies, including AIFM companies and investment funds (other than UCITS) established as public limited companies.

The Central Bank's November 2021 correspondence was addressed to all Irish regulated fund service providers, including AIFMs and internally managed investment funds.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

No.

What are, in summary, the key requirements of the legislation?

Section 327: Directors' report: Business review

1. The Directors' report for a financial year shall contain:
   • a fair review of the business of the company, and
   • a description of the principal risks and uncertainties facing the company.
2. The review required by subsection (1) shall be a balanced and comprehensive analysis of:
   • the development and performance of the business of the company during the financial year, and
   • the assets and liabilities and financial position of the company at the end of the financial year, consistent with the size and complexity of the business.
3. The review required by subsection (1) shall, to the extent necessary for an understanding of such development, performance or financial position or assets and liabilities, include:
   • an analysis of financial key performance indicators, where "key performance indicators" means factors by reference to which the development, performance and financial position of the business of the company can be measured effectively, and
   • where appropriate, an analysis using non-financial key performance indicators, including information relating to environmental and employee matters.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

See above.

What information does a PE/VC firm or fund manager need to make public on its website?

Not applicable.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

Not applicable.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

Not applicable.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Italy introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

Besides the pan-EU regulatory initiatives mentioned in the question, no Italian legislation provides for compulsory non-financial reporting requirements specifically governing or affecting AIFMs at fund or fund manager level.

However, turning to Italian legislation regarding Italian companies generally and introducing a voluntary regime involving non-financial reporting obligations, Law 208/2015 - which sets forth the conditions under which companies may acquire the “Benefit Corporation” status (Article 1, par. 376-384) - is worth being mentioned. Indeed, while 3 AIFMs already qualify as Benefit Corporations, others are in the process of acquiring this status and it is reasonable to assume that this will be a growing trend in the years to come.

Law 208/2015 provided that Benefit Corporations “in carrying out their economic activities shall pursue, in addition to the aim of distributing profits, one or more aims of common benefit, and shall operate in a responsible, sustainable and transparent manner vis-à-vis individuals, communities, territories and the environment, cultural and social heritage, entities and associations as well as other stakeholders”. Such common benefit purpose is to be specifically identified within the Benefit Corporation’s objects (as set out in its bylaws) and to be pursued by the directors, balancing the interests of, respectively, the shareholders and those who may be impacted by the company’s business activity. Please note that the Benefit Corporation status should not be confused with the B Corp certification: while the former is a status recognized and regulated by law, the latter is a private certification issued by a private entity (B Lab).

Benefit Corporations are required to provide an annual report including an assessment of the impact generated by their activities, using a “third party standard”. This non-financial reporting requirement is further detailed below.

Who does the legislation apply to (which fund managers, financial products)?

Law 208/2015 only applies to AIFMs that have (voluntarily) acquired the Benefit Corporation status thereunder.

This legislation does not expressly provide for disclosures at financial product level, as it applies to all Benefit Corporations generally. However, an AIFM qualifying as a Benefit Corporation will de facto be required to make some disclosures covering also its funds for the reasons explained below. Benefit Corporations are required to “produce an annual report, concerning the pursuit of common benefit”, to be attached to the annual financial statements. This annual report “shall include:

1. the description of the specific objectives, modalities and actions implemented by the directors in order to pursue the aims of common benefit and the possible mitigating circumstances which have prevented, or slowed up, the achievement of the above aims;
2. an assessment of the impact so generated, using a third-party standard having the requirements listed in Annex 4 and covering the assessment areas identified in Annex 5;
3. a specific section containing the description of the new objectives which the benefit corporation intends to pursue in the following fiscal year.”

Looking at 1) above, the description may or may not cover an AIFM’s funds, depending on how the “common benefit” is described in its bylaws. Looking at 2) above, the impact assessment has to take into account, assess and report also the impacts generated by an AIFM’s funds as and to the extent these fall within the assessment areas identified in Annex 5.

The requirements for the third-party standard and the assessment areas are discussed, respectively, at sections 3 and 8 below.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Law 208/2015 does not indicate a specific international standard or framework for the impact assessment. Instead, it generally refers to a third-party standard that “shall be:

1. comprehensive in that it assesses the impact of the business and its operations aimed at pursuing common benefit upon individuals, communities, territories and environment, cultural and social heritage, entities and associations, as well as other stakeholders;
2. developed by an entity which is not controlled by, or affiliated to, the benefit corporation;
3. credible in that it has been developed by a person that both:
   1. has access to necessary expertise to assess overall corporate social and environmental performance; and
   2. uses a balanced scientific and multi-stakeholder approach including a possible public comment period to develop the standard;
4. transparent in that the following information is made publicly available:
   1. the criteria considered when measuring the overall social and environmental performance of a business;
   2. the relative weightings of those criteria;
   3. the identity of the directors and the governing body of the organization that developed and controls revisions to the standard;
   4. the process by which revisions and changes to the standard are made; and
   5. an accounting of the sources of financial support for the organization, with sufficient detail to disclose any relationships that could reasonably be considered to present a potential conflict of interest.”

It should be noted that the B Impact Assessment - BIA (linked to the B Corp Certification mentioned at section 1 above) is currently one of the standards commonly used for the required impact assessment by Benefit Corporations.

What are, in summary, the key requirements of the legislation?

In summary, the key requirements of the legislation are:

• Purpose: profit sharing to be balanced with the pursuit of common benefit purposes;
• Bylaws: common benefit purposes to be detailed in the company’s bylaws;
• Governance and commitment: business activities to be carried out by directors in a responsible, sustainable and transparent manner (with regards to the community, environment and stakeholders), balancing the interests of shareholders and other stakeholders;
• Dedicated internal function: one or more individuals to be appointed and entrusted with the duty and responsibility of the actions pursuing the common benefit;
• Annual report: an annual report on the achievement of common benefit goals to be produced and attached to the annual financial statements, including the information set out at section 2 above.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

The legislation on Benefit Corporations does not provide for such specific disclosures.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

See above.

What information does a PE/VC firm or fund manager need to make public on its website?

The annual report is to be published on the Benefit Corporation’s website.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

The impact assessment contained in the annual report of Benefit Corporations must cover “the following areas:

1. Corporate governance, for assessing the degree of transparency and liability of the corporation in pursuing the aims of common benefit, with a particular focus on the corporate purpose, the degree of involvement of the stakeholders and the degree of transparency of the policies and practices adopted by the corporation;
2. Workers, for assessing the relationships with employees and collaborators in terms of salaries and benefits, training and opportunities of personal growth, quality of the working environment, internal communication, flexibility and job security;
3. Other stakeholders, for assessing the relationships of the corporation with its suppliers, the local environment and local communities in which it operates, the voluntary activities, the donations and the cultural and social activities, as well as any actions aimed at supporting the local development and the development of its own supply chain; and
4. Environment, for assessing the overall performance of the corporation, considering the life cycle of goods and services, in terms of exploitation of resources, energy, commodities, production, logistic and distribution processes, utilization and consumption and life end.”

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

An implementation challenge might be linked to the lack of indication of a single shared standard of assessment. Indeed, looking at the market, more than 70 assessment standards are currently used, this can lead to difficulties in comparing reported data.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Latvia introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

No.

Latvia has no local laws governing or affecting PE/VC firms’ non-financial reporting obligations (other than those deriving from EU law, such as SFDR and CSRD).

However, some gold-plating applies to alternative investment fund managers concerning the requirement arising from Article 3g of Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement, to develop an engagement policy that, inter alia, outlines how the managers will supervise the activities of the joint stock companies it invests in, in the fields of social and environmental impact and corporate management.

That is, while the Directive allows for the exclusion of the mentioned requirements for such alternative investment fund managers that are only subject to the registration obligation, the Law on Alternative Investment Funds and Managers Thereof which transposes the Directive (EU) 2017/828 requires both licensed and registered alternative investment fund managers to develop an engagement policy.

In terms of soft law ESG initiatives, the Ministry of Justice has published the Latvian Corporate Governance Code (hereinafter, the Code), which has been developed taking into account the requirements set for companies in the regulatory acts of the Republic of Latvia, as well as the recommendations of the Economic Cooperation and Development Organization for the corporate governance of companies. The Code can be used as guidelines by any company but is not mandatory for private companies.

Who does the legislation apply to (which fund managers, financial products)?

Not applicable.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Not applicable.

What are, in summary, the key requirements of the legislation?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

Not applicable.

What information does a PE/VC firm or fund manager need to make public on its website?

Not applicable.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

Not applicable.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

No.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Lithuania introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

No.

Lithuania has no local laws governing or affecting PE/VC firms’ non-financial reporting obligations (other than those deriving from EU law, such as SFDR and CSRD).

Who does the legislation apply to (which fund managers, financial products)?

Not applicable.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Not applicable.

What are, in summary, the key requirements of the legislation?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

Not applicable.

What information does a PE/VC firm or fund manager need to make public on its website?

Not applicable.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

Not applicable.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

Not applicable.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Luxembourg introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

No.

Luxembourg has no local laws governing or affecting PE/VC firms’ non-financial reporting obligations (other than those deriving from EU law, such as SFDR and CSRD). There is nothing in the pipeline either.

Who does the legislation apply to (which fund managers, financial products)?

Not applicable.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Not applicable.

What are, in summary, the key requirements of the legislation?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

Not applicable.

What information does a PE/VC firm or fund manager need to make public on its website?

Not applicable.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

Not applicable.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

Not applicable.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, have the Netherlands introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

Diversity Act (Diversiteitswet)
Listed companies and 'large' limited liability companies (which may include AIFMs) will be obliged to reach a quorum and/or set appropriate and ambitious targets for the ratio of men to women on boards, supervisory boards and at the sub-single level. They must report on this to the Social and Economic Council (Sociaal Economische Raad). The Social and Economic Council is a Dutch advisory body of entrepreneurs, employees and independent experts. It advises the government and parliament on socio-economic policy.

• Timeline: In force since 1 January 2022.
• Link: https://www.eerstekamer.nl/behandeling/20211026/publicatie_wet/document3/f=/vlnceijj5izy.pdf

Bill on Responsible and Sustainable International Business Conduct (Wet verantwoord en duurzaam ondernemen)
Sets rules for 'due care' (gepaste zorgvuldigheid) in the production and service chains of companies. Due care is the ongoing process by which a company identifies, prevents and mitigates the actual and potential adverse impacts of its operations on human rights, labour rights and the environment in a country outside the Netherlands, and is able to account for its approach to those impacts as an integral part of its decision-making process and risk management system, in accordance with the principles and standards of the OECD Guidelines for Multinational Enterprises (Article 1.1(c)).

• Timeline: Not in force (yet). The bill was submitted on 11 March 2021, and is still in its preparatory phase.
• Link: https://www.tweedekamer.nl/kamerstukken/wetsvoorstellen/detail?id=2021Z04465&dossier=35761

Who does the legislation apply to (which fund managers, financial products)?

Diversity Act (Diversiteitswet)

1. Applies to Dutch listed companies and large limited companies (Article 2:142b(1), 2:166(1) and 2:276(1) of the Dutch Civil Code). Fund managers may qualify as a large limited company if at least two of the following criteria are met:
   1. balance sheet total: €20 million
   2. net turnover: €40 million
   3. average number of employees: 250.
2. Does not apply to any particular financial product.

Draft Initiative Bill Responsible and Sustainable International Business Conduct (Wet verantwoord en duurzaam ondernemen)

1. Applies to Dutch registered companies that have operations outside of the Netherlands and to which at least two of the following requirements apply (Article 2.1):
   1. balance sheet total: €20 million
   2. net turnover: €40 million
   3. average number of employees: 250.
2. Does not apply to a particular financial product.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Diversity Act (Diversiteitswet)
No.

Draft Initiative Bill Responsible and Sustainable International Business Conduct (Wet verantwoord en duurzaam ondernemen)
OECD Guidelines for Multinational Enterprises.

What are, in summary, the key requirements of the legislation?

Diversity Act (Diversiteitswet)
On the topic of disclosure, the Act requires that the company shall annually report to the Social and Economic Council on the number of men and women making up the management board and supervisory board at the end of the financial year, as well as the categories of employees in managerial positions, the company's objectives in this respect in the form of a target figure, the plan for achieving these objectives and, if one or more objectives have not been achieved, the reasons for this (Article 2:166(4) and 2:276 (4) of the Dutch Civil Code).

Draft Initiative Bill Responsible and Sustainable International Business Conduct (Wet verantwoord en duurzaam ondernemen)
On the topic of disclosure, the Bill requires a company to:

• Publish a policy document in which it commits itself to observe due care in respect of the supply chain (Article 2.2);
• Annually report on its policy and measures for due care (Article 2.6).

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

Diversity Act (Diversiteitswet)
None.

Draft Initiative Bill Responsible and Sustainable International Business Conduct (Wet verantwoord en duurzaam ondernemen)
None.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

Diversity Act (Diversiteitswet)
Please see above.

Draft Initiative Bill Responsible and Sustainable International Business Conduct (Wet verantwoord en duurzaam ondernemen)
The Bill requires a company to annually report on its policy and measures for due care (Article 2.6). Please see above.

What information does a PE/VC firm or fund manager need to make public on its website?

Diversity Act (Diversiteitswet)
None. Annual reports can be published on a public website, yet Dutch law only requires them to be filed at the Dutch Chamber of Commerce.

Draft Initiative Bill Responsible and Sustainable International Business Conduct (Wet verantwoord en duurzaam ondernemen)
None. However, the Minister may lay down further rules for the creation, publication and content of the policy document (Article 2.2). Annual reports can be published on a public website, yet Dutch law only requires them to be filed at the Dutch Chamber of Commerce.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

Diversity Act (Diversiteitswet)
No.

Draft Initiative Bill Responsible and Sustainable International Business Conduct (Wet verantwoord en duurzaam ondernemen)
No, please see above.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

Diversity Act (Diversiteitswet)
The consequences of not reaching the target figure are unknown. It is not clear what justification for not reaching a target figure will suffice. Also, it is not concrete how the efforts of companies will be assessed and by whom.

Draft Initiative Bill Responsible and Sustainable International Business Conduct (Wet verantwoord en duurzaam ondernemen)
'Due care' is an open norm that requires further interpretation.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Poland introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

In Poland there are two Acts which implemented the NFRD, i.e.:

1. The Accounting Act of 29 September 1994 r. (Journal of Laws of 2021, item 217, as amended), implementing in Poland the part of the NFRD pertaining to the non-financial obligations (the “Accounting Act”) – the respective changes reflecting implementation of the NFRD introduced by the Act on the amendment of the Accounting Act dated 15 December 2016 became effective on 25 January 2017.
2. Regulation of the Minister of Finance on current and periodic information provided by issuers of securities and conditions for recognizing as equivalent information required by the laws of a non-Member State of 29 March 2018 (the “Regulation”) implementing in Poland the part of the NFRD pertaining to diversity. The Regulation became effective on 30 April 2018.

Limited obligations related to ESG are also included in the following Act:

1. Act on Investment Funds and Alternative Investment Funds Management of 27 May 2004 (Journal of Laws No. 146, item 1546, as amended) (the “Act on Funds”).

Apart from the above two Acts, the Warsaw Stock Exchange (WSE) in 2021 amended its Best Practices pertaining to the companies listed at WSE which should disclose certain information related to ESG, i.e.:

1. Best Practice for the Warsaw Stock Exchange Listed Companies 2021 (the “Best Practice”).

Who does the legislation apply to (which fund managers, financial products)?

The Accounting Act
Under the Accounting Act, all entities which are either a (i) capital company, (ii) limited joint-stock partnership, (iii) general partnership or (iv) limited partnership, in which all the partners bearing unlimited liability are capital companies, limited joint-stock partnerships or foreign entities and for which, at the same time, the following thresholds are met:

1. the average annual employment (FTE) is 500 persons;
2. the total assets in the balance sheet at the end of the financial year equal PLN 85,000,000; or
3. the net revenue from sales of goods and products for the financial year equals PLN 170,000,000.

An entity is permitted not to draw up the statement on non-financial information if it separately prepares, together with the report on activities, a report on non-financial information and publishes it on its website within 6 months from the balance sheet date. The entity shall include in its report on activities the information on drawing up a separate report on non-financial information.

An entity which is a subsidiary entity, including a lower-level controlling entity, is permitted not to draw up the statement on non-financial information or the report on non-financial information if its higher-level controlling entity having its seat or head office on the territory of the European Economic Area draws up a statement of a capital group on non-financial information or a report of a capital group on non-financial information in accordance with the provisions of law of the European Economic Area state by which it is governed, which statement or report shall cover this entity and its subsidiary entities of every level. In this case, the entity shall disclose in the report on activities the name and seat of its higher-level controlling entity which draws up the statement or report of a capital group on non-financial information covering this entity and its subsidiary entities.

The Regulation
The Regulation applies to an issuer, which exceeds at least two of the following thresholds:

1. an average annual employment (FTE) of 250 persons;
2. PLN 85,000,000 - in the case of total assets in the balance sheet at the end of the financial year;
3. PLN 170,000,000 - in the case of net sales revenue for the financial year.

The Act on Funds
The Act on Funds applies to a company managing a fund or an alternative investment company investing assets in the shares of companies admitted to trading on a regulated market.

The Best Practice
Best Practice applies to the companies listed at the WSE.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Not applicable.

What are, in summary, the key requirements of the legislation?

The Accounting Act
A statement on non-financial information shall include at least:

1. a brief description of the entity's business model;
2. non-financial key performance indicators connected with the entity's activity;
3. a description of policies applied by the entity with respect to social issues, employees’ issues, environmental issues, respect for human rights and corruption prevention, as well as a description of the results of applying these policies;
4. a description of due diligence procedures – where the entity applies the same as part of the policies referred to in point 3;
5. a description of significant risks connected with the entity’s activities which may have an adverse impact on the issues referred to in point 3, including risks linked with the entity’s products or its relations with the external environment, including with contracting parties, as well as a description of managing these risks.

The Regulation
The yearly report should include information required under the Accounting Act as well as a description of the diversity policy applicable to the issuer's administrative, management and supervisory bodies with respect, in particular, to age, gender or education and professional experience, the objectives of that diversity policy, the manner in which it is implemented and its effects during the reporting period, and, if the issuer does not have such a policy, an explanation of that decision.

The Act on Funds
The company managing a fund or an alternative investment company investing assets in the shares of companies admitted to trading on a regulated market shall prepare and publish the policy concerning the exposure which describes how the exposure of shareholders of such companies is taken into account in the society's investment strategy by this company. An entity shall, on an annual basis, prepare and publish a report on the implementation of the policy. If it fails to prepare or publish the policy or the report, it shall publish the explanations of the reasons for failure to do so.

The Best Practice
The companies are required to consider ESG factors in their business strategy, including in particular environmental factors (measures and risks relating to climate change and sustainable development), social and employee factors (including among others equal treatment of women and men, gender diversity of corporate bodies and equal remuneration).

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

Information indicated in Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector to the extent it applies.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

The Regulation
Information on posting on the issuer's website the group's statement on non-financial information or the group's report on non-financial information prepared by the higher-level parent entity should be disclosed in the current report.

What information does a PE/VC firm or fund manager need to make public on its website?

The Accounting Act
The manager of an entity shall place on the website of such entity a capital group statement on non-financial information or a capital group report on non-financial information drawn up by the higher-level controlling entity, within 30 days of the day of its approval but no later than within 12 months of the balance sheet date of such controlling entity, each of them translated into the Polish language by a sworn translator.

The Act on Funds
The policy, report and explanations required under the Act on Funds.

The Best Practice
The companies should publish information about their business strategy on their website. Information concerning the ESG area should among others: (i) explain how the decision-making process of the company and its group members integrates climate change, including the resulting risks; (ii) present the equal pay for employees, defined as the percentage difference between the average monthly pay of women and men in the last year; and (iii) provide information about actions taken to eliminate any pay gaps.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

The Accounting Act
Under the Accounting Act:

1. While drawing up the statement on non-financial information, the entity shall present non-financial information to the extent it is necessary for assessing the entity’s development, results and standing as well as the impact of the entity’s activities on social issues, employees’ issues, environmental issues, respect for human rights and corruption prevention;
2. Where there is a link between the values shown in the annual financial statements and the information included in the statement on non-financial information, the statement shall include references to the amounts shown in the financial statements as well as additional explanations regarding these amounts;
3. If the entity does not apply a policy as regards one or several issues referred to in point 1) above, the entity shall include in the statement on non-financial information the reasons for not applying such policy.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

Not applicable.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Portugal introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

There is no national bespoke regime (i.e., Portuguese legislation besides legislation deriving directly from pan-EU regulatory initiatives) on ESG disclosures affecting PE/VC firms. At this stage, there is no national legislative procedure or initiative either.

Both the SFDR and CSRD (formerly NFRD), and other initiatives, such as the Delegated Directive 2021/1270, have been implemented or transposed (as appropriate) within the Portuguese legal framework through various pieces of legislation. The supervision on compliance with the legal provisions contained in these legislations is mainly performed by the Portuguese Securities and Exchange Commission (Comissão do Mercado dos Valores Mobiliários, hereinafter “CMVM”).

On 21 December 2021, the CMVM published a circular letter on ESG organisational and disclosure requirements and CMVM’s supervision approach.

Who does the legislation apply to (which fund managers, financial products)?

Not applicable.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Not applicable.

What are, in summary, the key requirements of the legislation?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

Not applicable.

What information does a PE/VC firm or fund manager need to make public on its website?

Not applicable.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

Not applicable.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

Not applicable.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Romania introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

Both the SFDR and CSRD (formerly NFRD) have been transposed within the Romanian legal framework through various pieces of legislation. The observance of the legal provisions contained in these legislations is mainly performed by the Romanian Financial Supervisory Authority (“Romanian FSA”) and the National Bank of Romania.

Referring strictly to investment funds and fund managers (with an emphasis on PE/VC firms and fund managers), the SFDR has been transposed in Romanian legislation through the Law No. 158/2020 (“ESG Amendment Law”) which besides amending various legal provisions applicable to other entities in the financial sector, also amends the Law No. 74/2015 regarding the managers of alternative investment funds (“AIFM Law”) – a piece of legislation which actually implements the Directive 2011/61/EU on Alternative Investment Fund Managers (“AIFM Directive”). Moreover, all the legal provisions contained under the SFDR are directly applicable in Romania.

Also, the CSRD has been transposed by the Romanian FSA through various pieces of secondary legislation, more exactly through the FSA Norm No. 39/2015, the FSA Norm No. 1/2017 and the FSA Norm No. 2/2017.

The legal frameworks transposing the SFDR and CSRD are currently in force. The Romanian FSA is also implementing specific guidelines in this respect and devoting an entire section on its webpage to this matter.

Who does the legislation apply to (which fund managers, financial products)?

The AIFM Law, as amended by the ESG Amendment Law, follows the general pattern set out in the AIFM Directive, applying to the following:

1. Romanian legal entities which manage one or several AIFs (based in Romania or abroad);
2. non-EU AIFMs for which Romania is set as Member State of Reference;
3. EU AIFMs which distribute in Romania participation titles of one or several EU AIFs;
4. EU AIFMs which manage Romanian AIFs;
5. EU AIFMs which distribute in Romania participation titles of one or several non-EU AIFs;
6. non-EU AIFMs which distribute in Romania participation titles of one or several AIFs.

As regards the specific financial products to which the aforementioned legislation applies, this relates also to alternative investment funds (AIFs) – as mentioned also in Article 2, Point 12, Letter (b) of the SFDR.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Neither the AIFM Law nor the ESG Amendment Law provides any references to a specific link to an international standard or framework. Most likely, these will be set out/disclosed by the Romanian FSA at a later stage.

What are, in summary, the key requirements of the legislation?

The ESG Amendment Law basically points to the legal provisions under the SFDR when addressing these key requirements – the SFDR being directly applicable in Romania.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

The Romanian legal provisions (i.e., the AIFM Law and the ESG Amendment Law) do not expressly set out any information, which the PE/VC firms or fund managers must disclose in their pre-contractual reports.

More concretely, the Romanian legal provisions indirectly refer to the SFDR when addressing the type of information which the PE/VC firms or fund managers must disclose in their pre-contractual reports. This is basically set out by providing an express obligation for the supervised entities (i.e., PE/VC firms or fund managers) to observe the legal provisions under the SFDR.

It is worth mentioning that in case of (occurrence of) any breach of the legal provisions under the SFDR, the PE/VC firm or fund manager could be fined by the Romanian FSA, as this is expressly stated within the ESG Amendment Law and consequently under the AIFM Law.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

The type of information which the PE/VC firms or fund managers must disclose in their periodic reports is expressly provided under the SFDR. The Romanian legal provisions do not add to the information required by the SFDR.

What information does a PE/VC firm or fund manager need to make public on its website?

The information which must be disclosed by the PE/VC firms or fund managers on their websites is expressly provided under the SFDR. The SFDR is directly applicable in Romania and the Romanian legal framework does not add any other information in this respect.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

All the information which the PE/VC firms or fund managers must disclose is provided under the SFDR.

Also notable is the fact that the Romanian FSA has issued certain recommendations on the prudential approach related to the environmental risks. Therefore, the Romanian FSA has imposed on its supervised entities to revert with a reporting form until 30 June 2022, with respect to the measures they have taken regarding the implementation of the recommendations of the Romanian FSA on this topic. However, no follow-up information on this topic is publicly available on the web page of the Romanian FSA or on other public sources at this point.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

As per the publicly available information, certain EU legal provisions which are supposed to be implemented within the next period, such as those contained under the Delegated Directive (EU) 2021/1269, will be further transposed within the Romanian legal framework. In this specific case, these legal provisions are currently in draft form and must further observe certain approval formalities by the relevant Romanian public authorities.

In contrast, Romania has made in the recent period significant steps to implement other relevant EU legal provisions, such as those contained under the Delegated Directive (EU) 2021/1270, which have been transposed under the Law No. 239/2022 on the amendment of the Emergency Government Ordinance No. 32/2012 regarding collective investment undertakings, investment management services companies and the amendment of the Law No. 297/2004 on the capital market (piece of legislation which has been implemented in July 2022).

Also relevant is the fact that the Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment, and amending the SFDR is directly applicable in Romania.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Slovakia introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (SFDR) is directly applicable in the Slovak Republic and is binding in its entirety, without needing to be transposed into national law. The obligations set out in this Regulation shall also apply directly in the Slovak Republic.

Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups (NFRD) was transposed into Act no. 431/2002 Coll. on accounting (Accounting Act). The law does not impose any obligations beyond the scope of the Directive.

As far as the CSRD is concerned, the final Directive governing non-financial reporting obligations has not yet been adopted. The Ministry of Finance of the Slovak Republic has confirmed that it will start preparing the legislation which will transpose the CSRD only after the official adoption of the Directive.

Who does the legislation apply to (which fund managers, financial products)?

The NFRD was transposed into the Accounting Act.

The SFDR is directly applicable without exception.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Not applicable.

What are, in summary, the key requirements of the legislation?

The key requirements are the same as those of European Union law.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

The obligations and requirements are in accordance with the scope of the EU law, which is currently in force.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

The obligations and requirements are in accordance with the scope of the EU law, which is currently in force.

What information does a PE/VC firm or fund manager need to make public on its website?

The obligations and requirements are in accordance with the scope of the EU law, which is currently in force.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

No.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

No.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Spain introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

Spain has not introduced any ESG/sustainability-related national legislation governing or affecting PE/VC firms in addition to SFDR, CSRD and other pan-EU regulatory initiatives.

However, the Spanish Securities Market Commission (the “CNMV”) has issued a guideline, in the form of a Q&A, related to the SFDR (the “Q&A”), which can be found here.

Who does the legislation apply to (which fund managers, financial products)?

Not applicable.

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

Not applicable.

What are, in summary, the key requirements of the legislation?

Not applicable.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

In accordance with the Q&A in relation to the SFDR, the information which a PE/VC firm or fund manager needs to disclose in pre-contractual reports shall include, at least:

For an Article 8 SFDR financial product:

1. indication that the financial product promotes environmental or social characteristics;
2. indication of the environmental or social characteristics that the product promotes;
3. description of the type of investment strategy;
4. description of the binding elements of the investment strategy;
5. explanation of the investments of the product including the minimum percentage of investments used to achieve the environmental or social characteristics promoted; and
6. if applicable, whether and how a specific index has been designated as a benchmark for determining whether the product is aligned with the environmental or social characteristics it promotes and how such index is consistent with those characteristics, as well as information on where to find the methodology used to calculate the index.

For an Article 9 SFDR financial product:

1. indication that the financial product has a sustainable investment objective;
2. indication of the sustainable investment objective of the product;
3. the binding elements of the investment strategy;
4. information on the intended asset allocation;
5. whether or not the product takes into account principle adverse impacts on the sustainability factors; and
6. information on where further product information can be found.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

In accordance with the Q&A in relation to the SFDR, financial market participants shall disclose in periodic reports:

• In the case of an Article 8 SFDR financial product: the extent to which environmental or social characteristics have been met.
• In the case of an Article 9 SFDR financial product: the overall sustainability impact of the product using relevant sustainability indicators; or, if a benchmark has been designated, a comparison of the overall sustainability impact of the financial product in terms of the designated benchmark and a general market index using sustainability indicators.

What information does a PE/VC firm or fund manager need to make public on its website?

In accordance with the Q&A in relation to the SFDR, the information to be published and kept up to date on the website is the following:

1. a description of the environmental or social characteristics or the sustainable investment objective;
2. information on the methods used to assess, measure and monitor the environmental or social characteristics or impact of the sustainable investments selected for the financial product, including their sources of information, the selection criteria relating to the underlying assets and the relevant sustainability indicators used to measure the environmental or social characteristics or the overall sustainability impact of the financial product;
3. the pre-contractual information referred to in Articles 8 and 9 of the SFDR;
4. the periodic information referred to in Article 11 of the SFDR; and
5. the information referred to in Article 11 of the SFDR.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

No, apart from the fact that the information contained in the annual financial statements shall comply with the SFDR on the basis of the general principles of Article 11.1 of the SFDR.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

The main challenge is the lack of data required to fulfil SFDR obligations. In this sense, concerns generally relate to the need to comply with the SFDR before the regulatory technical standards have been published.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Sweden introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

National ESG disclosure requirements for alternative investment fund managers

Chapter 10 para. 11 of the Swedish Alternative Investment Fund Managers Act (the “AIFMA”) contains a national ESG disclosure provision that is not based on EU legislation (which was introduced before the SFDR). It has recently been revoked as a result of the SFDR’s entry into force, but continues to apply during a transitional period. The reporting requirement under this AIFMA provision will apply for the last time to annual reports published before 1 January 2023 (i.e., normally, the annual reports concerning the financial year 2021). Thereafter, the provision ceases to apply.

National thresholds for application of the NFRD ESG reporting requirements

The NFRD (Directive 2014/95/EU) has been incorporated in Sweden by way of national legislation establishing lower applicability thresholds than prescribed by the NFRD (as further described below).

Who does the legislation apply to (which fund managers, financial products)?

National ESG disclosure requirements for alternative investment fund managers
The abovementioned disclosure and reporting requirement under the AIFMA applies to AIFMs that market AIFs to non-professional investors in Sweden, and to each AIF marketed to non-professional investors in Sweden.

National thresholds for application of the NFRD ESG reporting requirements
Funds and fund managers in relation to which two or more of the following thresholds are met for each of the two latest financial years:

1. > 250 employees
2. balance sheet total of > SEK 175 million
3. net sales of > SEK 350 million

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

National ESG disclosure requirements for alternative investment fund managers
No.

National thresholds for application of the NFRD ESG reporting requirements
The requirements are part of the national implementation of the NFRD.

What are, in summary, the key requirements of the legislation?

National ESG disclosure requirements for alternative investment fund managers
AIFMs in scope shall provide the information necessary for non-professional investors to understand the management of the fund in relation to ESG matters, including environmental, social, and employee matters, human rights and anti-corruption. The disclosure shall include information on: (i) the sustainability aspects/ESG matters that are taken into account in the management of the fund, (ii) the method or methods used for such sustainability efforts, and (iii) the AIFMs monitoring and follow-up of the sustainability work.

If sustainability aspects are not taken into account, the AIFM shall instead disclose that sustainability aspects are not considered for the relevant fund.

National thresholds for application of the NFRD ESG reporting requirements
Funds and fund managers that fulfil the criteria and thresholds according to the Swedish Accounting Act must report on ESG matters pursuant to the Swedish Account Act, in which the NFRD has been incorporated. More specifically, the report should address "such sustainability information that is required to understand the company’s development, position and result", as well as the impact of the business, including in relation to the environment, social impact, employee matters, respect for human rights, and the prevention of anti-corruption. The report shall include, among other things: (i) the company’s business model; (ii) on a comply or explain basis, corporate policies on the above-mentioned areas; (iii) policy compliance assurance activities; (iv) main risks for potential adverse impacts from the company’s operations as well as its value chain; (v) how risks are addressed; and (vi) key performance indicators.

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

National ESG disclosure requirements for alternative investment fund managers
Pre-contractual disclosures should disclose (i) the ESG matters that are considered in the management of the fund and (ii) the method or methods used for sustainability efforts. The ESG matters mentioned in the AIFMA include environmental, social and employee matters, human rights and anti-corruption. The list is, however, not exhaustive and the AIFMA does not provide any further details or metrics to be used as basis for the integration of ESG matters.

As mentioned above, if ESG matters are not taken into account, this should be stated in the pre-contractual disclosures.

National thresholds for application of the NFRD ESG reporting requirements
Not applicable.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

National ESG disclosure requirements for alternative investment fund managers
Annual reports should contain information about how sustainability matters are followed up – or – that such information is not provided.

National thresholds for application of the NFRD ESG reporting requirements
ESG information pursuant to the Swedish Account Act, in which the NFRD has been incorporated.

What information does a PE/VC firm or fund manager need to make public on its website?

National ESG disclosure requirements for alternative investment fund managers
Information made available on websites should include the information necessary for non-professional investors to understand the management of the fund in relation to ESG matters, including environmental, social, and employee matters, respect for human rights and prevention of corruption. The information should address which ESG matters are considered in the fund management, method or methods used for sustainability efforts, and how sustainability matters are followed up.

Alternatively, AIFMs need to state that ESG matters are not considered in the management of the fund.

National thresholds for application of the NFRD ESG reporting requirements
Not applicable.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

National ESG disclosure requirements for alternative investment fund managers
No.

National thresholds for application of the ESG reporting requirements in NFRD
Not applicable.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

National ESG disclosure requirements for alternative investment fund managers
None identified.

National thresholds for application of the NFRD ESG reporting requirements
None identified.

Besides the SFDR, CSRD (formerly NFRD) and other pan-EU regulatory initiatives, has Switzerland introduced any national legislation governing or affecting PE/VC firms’ non-financial (i.e., ESG/sustainability) reporting obligations? If so, when did/will it become effective?

Switzerland has introduced the following rules:

1. FINMA Circular Disclosure - Banks 2016/1, effective since 1 January 2016
2. FINMA Guidance 05/2021 - Preventing and combating greenwashing, effective since 3 November 2021
3. ESG Reporting and Due Diligence requirements (counter-proposal of Corporate Responsibility initiative in 2020) - It is expected that affected companies will have to apply the new requirements in financial year 2023
4. Furthermore, at its meeting on 17 November 2021, the Federal Council decided to pursue transparency measures to avoid greenwashing and to strive for the conclusion of industry agreements with financial market players in accordance with the Federal Council's decision of 26 June 2019. Further information to come.

Who does the legislation apply to (which fund managers, financial products)?

1. FINMA Circular Disclosure - Banks 2016/1 - Applicable to Banks, Financial Groups and Conglomerates, and Securities dealers
2. FINMA Guidance 05/2021 - Applicable to Fund Management Companies and Swiss collective investment schemes
3. ESG Reporting and Due Diligence requirements - Applicable to all public entities

Is the legislation linked or related to a specific international standard or framework (e.g., SASB, CDSB, CDP, etc.)?

No.

What are, in summary, the key requirements of the legislation?

FINMA Circular Disclosure - Banks 2016/1
Banks in supervisory categories 1 and 2 shall disclose information on how they are managing climate-related financial risks as part of their financial reporting. Such disclosure shall include for example: (i) Governance structure the bank has in place to identify and monitor climate-related financial risks, (ii) Description of climate-related financial risks, (iii) Risk management structure and process, (iv) Quantitative information on climate-related financial risks, etc.

FINMA Guidance 05/2021
Swiss collective investment schemes: The fund documents of Swiss collective investment schemes must contain the information necessary for an investment decision. Within the framework of sustainability reporting, investors should be clearly and transparently informed to which extent the Swiss collective investment scheme with a sustainability focus has achieved its sustainability goals.

Fund Management Company/Manager of collective assets: There are not yet any specific regulations to combat greenwashing*. The Federal Council is considering making appropriate adjustments to financial market law. Pending possible implementation, guidance from the industry can contribute to preventing and combating greenwashing, such as the Swiss Bankers Association's Guide to the inclusion of ESG criteria in the Advisory process for Private Clients. The Guide contains recommendations on the inclusion of sustainability criteria in the advisory process for all financial products for private clients.

ESG reporting and Due diligence requirements
Following the rejection of the Corporate Responsibility Initiative in 2020 in Switzerland, the indirect counterproposal came into force, which foresees a reporting obligation based on the Non-Financial Reporting Directive (NFRD) in the EU. Publicly traded companies that exceed defined thresholds for full-time equivalents and sales or total assets are required to report annually on environmental and social issues, employee matters, respect for human rights and the fight against corruption. Disclosures are to be made insofar as they are relevant both for understanding the course of business, the business results, the situation of the company and for the entrepreneurial impact on these concerns (the so-called double materiality). The planned law does not specify a standard according to which reporting must be carried out. In particular, companies reporting for the first time can thus initially focus on the reporting elements required by law. In addition to the general transparency requirements, new reporting and due diligence requirements in the area of conflict minerals and child labor will also be relevant for a broader group of companies.

* However, please note that the designation of foreign collective investment schemes offered in Switzerland must not provide grounds for confusion or deception (CISA Art. 120 para. 2 lit. c).

What information does a PE/VC firm or fund manager need to disclose in pre-contractual reports?

FINMA Guidance 05/2021 - See previous question regarding disclosure requirements in fund documents.

What information does a PE/VC firm or fund manager need to disclose in periodic reports?

FINMA Guidance 05/2021 - See above regarding disclosure requirements in fund documents.

What information does a PE/VC firm or fund manager need to make public on its website?

FINMA Circular Disclosure - Banks 2016/1: See above regarding annual disclosure requirements for category 1 and 2 banks as part of the annual report.

Is there any other information that a PE/VC firm or fund manager needs to disclose?

No.

Have there been or do you expect any implementation challenges or Known Unknowns? If so, which ones?

No.