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Ahead of the fast approaching application date (10 March 2021), Invest Europe has been in contact with the European Commission to express its concerns about some of the grey areas around SFDR, including the scope of Article 8 and the public disclosures pursuant to Article 10 by private funds.

In this consultation response, Invest Europe has mainly focused on the lack of tailoring in the disclosure templates to specific asset classes, such as PE/VC, and the need to avoid a one-size-fits-all approach. We have also used this opportunity to reiterate our concerns around the scope of the Article 8 SFDR perimeter.

In this consultation response, we emphasise the importance of respecting the principles of proportionality, materiality and flexibility, and the need to avoid a one-size-fits-all approach. In addition, we urge the European Supervisory Authorities to recognise the lack of available data for non-listed companies, in particular SMEs, and the limited relevance of many proposed indicators given the large diversity of economic sectors invested in by PE/VC funds.

In this consultation response, Invest Europe has shared the industry's views on the European Commission's Renewed Sustainable Finance Strategy. Particular areas of focus were fiduciary duties, remuneration, financial stability risk, short-termism and due diligence.

In this consultation response, Invest Europe has expressed its support for the proposed amendments but has raised some concerns with the way MiFID has been implemented in certain countries, in particular in relation to what has been considered as “marketing”.

In this consultation response, Invest Europe welcomes the Commission’s high-level, principles-based approach to integrate sustainability into the AIFMD Delegated Acts. In light of the diversity among market practitioners, it is crucial to avoid a one-size-fits-all approach and to strive for appropriate rules that are practical, workable and proportionate, as such avoiding imposing unnecessary, additional burden on AIFMs.

In this consultation response, Invest Europe welcomes the high-level, principles-based approach adopted by the European Commission. It provides a level of proportionality and flexibility, which is key to enable financial market participants to implement the new requirements in a way that is in line with their business needs and supports the needs of their individual portfolio companies.

In this response we encourage the European Commission to be extremely cautious about expanding the scope of the NFRD too widely and too quickly, taking into account the disproportionate impact this could have on non-listed companies and in particular SMEs. Any changes to the NFRD regime should be considered in light of proportionality, materiality and flexibility. A voluntary and gradual approach is preferred.

European Central Bank: Contribution by Luis de Guindos, Vice-President of the ECB, on the occasion of the publication of the ECB report on “Financial integration and structure in the euro area”

This voluntary best practice guide aims to help private equity firms identify and address material ESG risks and opportunities, both prior to investment and during the ownership period. It also includes a comprehensive questionnaire covering a wide range of ESG issues.

In this response, we stress the need for ESMA to stick to a high-level principles-based approach, recognising the diversity among market practitioners and allowing a certain level of flexibility in implementation (according to the proportionality principle). In addition, it is important to avoid treating ESG as a standalone or overriding risk category in the deal process, but rather to consider it as a category of direct business risks, which should be incorporated in existing functions and processes.

In this response, we express our support for ESMA’s proposed high-level principles-based approach, avoiding overly prescriptive rules, which could increase the risk of regulatory arbitrage. We also support ESMA’s recognition that any changes introduced should be applied by firms with the proportionality principle in mind, taking into account the size, nature, scale and complexity of their activities.

In this response, Invest Europe has confirmed its support for the European Commission’s work in this field, recognising the fiduciary duty of institutional investors and asset managers to incorporate sustainability factors in their investment decisions and monitoring. However, we feel it is important to maintain a certain level of discretion and flexibility, as it will be up to asset managers and investors themselves to decide and agree on how they do this given they might have different (responsible) investment approaches, clients and beneficiaries, and operate under different (national) legislation.

In this response, Invest Europe has expressed its support for the European Commission’s work in this field, recognising that ESG factors should be part of the fiduciary duty of institutional investors and asset managers. However, there are a few issues that ought to be considered: (i) “material sustainability” should be properly defined; (ii) a one-size-fits-all solution would not be appropriate; and (iii) careful thought should be given to the right way forward (legislative or non-legislative).