EU Sustainable Finance Disclosure Regulation-Impact on Private Fund Managers - Foley & Lardner LLP
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The Investment Lawyer
Covering Legal and Regulatory Issues of Asset Management
VOL. 28, NO. 5 • MAY 2021
EU Sustainable Finance Disclosure
Regulation—Impact on Private Fund
Managers
By Anne-Gaelle Delabye and Stuart Fross
A
s of this writing, the European Union’s the Paris Agreement in order to transition capital
Sustainable Finance Disclosure Regulation flows towards environmentally and socially sustain-
(SFDR or Level 1 regulation1) is in effect able economic activities.5 In December 2019, the
from March 10, 2021 (Effective Date2). US fund European Union announced the European Green
managers raising capital in Europe now need to Deal, a transformative effort to make Europe the
make disclosures as to just how “green” and/or first carbon neutral continent by 2050 accompanied
“social” they are.3 In the funds industry, manda- by an action plan affecting every aspect of the EU
tory disclosures under SFDR should be made on economy. SFDR is one part of a package of regula-
the management company level (for example, by tory measures brought in by the European Union to
the asset managers about their own policies) and on create a harmonized sustainable finance framework
the product level (for example, funds’ investment for the European financial services industry.6 SFDR
strategies) through several channels: the manager’s is the mechanism by which financial services are to be
website; pre-contractual disclosures made to inves- harnessed to this cause. By year end, it will become a
tors, such as those in the private placement memo- uniform disclosure regime relating to the integration
randum; and periodic reports, such as the annual of sustainability risks into investment processes, on
financial statements of a fund. SFDR may be looked the consideration of adverse sustainability impacts of
at as having two objectives: (1) to preclude “green investments, on sustainable investment objectives,
washing,” and (2) to encourage “green” and/or or on the promotion of environmental or social
“social” investing. SFDR encompasses a broad range characteristics, in investment decisionmaking and in
of entities and products well beyond the investment advisory processes.
management industry (including insurance and In this context, within the European Union, it
banking). This article focuses on the implementa- has been determined that the “prudent man rule”
tion of SFDR in the funds industry. now needs to incorporate sustainability risks into
investment decisions. In this context EU lawmakers
Context have found that
SFDR is a step towards the implementa-
tion of the commitments of the European Union financial market participants and financial
under the UN 2030 Agenda, the United Nations advisers should integrate in their processes,
Sustainable Development Goals (SGDs)4 and including in their due diligence processes,2 THE INVESTMENT LAWYER
and should assess on a continuous basis not required by funds whose offerings are closed by
not only all relevant financial risks but also member state regulators, over time. This being said,
including all relevant sustainability risks other SFDR requirements (including website dis-
that might have a relevant material negative closures and periodic reports disclosures) still apply
impact on the financial return of an invest- to these funds and their AIFMs, even though mar-
ment or advice. Therefore, financial market keting of these funds ceased prior to the Effective
participants and financial advisers should Date.11
specify in their policies how they integrate
those risks and publish those policies.7 The Implementation Calendar
While pre-contractual disclosure, and to a cer-
Thus, the EU lawmakers set out to harness the tain extent, website disclosures, already apply, this
asset managers’ fiduciary duty to their clients towards kind of disclosure is the tip of the regulatory “ice-
the cause of transitioning the European Union to a berg” and is the first level of SFDR. Implementation
more sustainable economy. Further, to make these of Level 1 regulation is currently done by financial
concepts less abstract, SFDR mandates incorpo- market participants and financial advisers on a
ration of sustainability risk management into the principles-based approach. Calendar year 2021 is
compensation arrangements (that is, the bonuses) of considered as a transition year due to SFDR’s imple-
portfolio managers to funds (and in respect of other mentation through a phased approach. By year-end,
identified staff). In short, SFDR means to affect the however, the final regulatory technical standards
thinking and the compensation of the employees of (RTS or Level 2 regulation12) will be endorsed by
fund managers. the European Commission, and a detailed format
for precisely reporting just how “sustainable” each
SFDR Applies to You fund is, will have been implemented. While some
SFDR applies to EU “financial market partici- of the pre-contractual disclosures and periodic
pants” and “financial advisers,” terms that incorpo- reports will have to comply with Level 2 regula-
rate asset managers including alternative investment tion as from January 2022, Level 2 regulation will
fund managers (AIFMs) and management compa- have its full impact when the first principal adverse
nies of undertakings for collective investment in impacts (PAI) statements (as detailed below)
transferable securities (UCITS management compa- are due on June 30, 2022. The second PAI state-
nies).8 It also will apply to: (1) US registered invest- ment with information relating to specific report-
ment adviser (RIA) delegates of AIFMs and UCITS ing periods (including PAI indicators) will be due
management companies; and (2) US investment June 30, 2023.13
managers that manage funds offered in an EU mem- Accordingly, US managers must now consider
ber state by means of a “national private placement.”9 just how sustainable each of their funds is in light
While funds whose shares are on offer in Europe of the principles provided for in Level 1 regulation,
today are plainly in the scope of SFDR, closed-ended and be prepared to follow the current draft RTS,
funds that have completed their offerings prior to follow the final implementation of the RTS, and
the Effective Date are in a regulatory twilight zone have their back-offices ready to report in relation to
as of this writing. The SFDR is in effect, and yet it the RTS when adopted over the course of this year.
is simply not possible to make “pre-contractual” dis- Many industry respondents to the public consulta-
closures, with respect to subscriptions accepted prior tion launched by European Supervisory Authorities
to the Effective Date.10 The industry is hoping for a (ESAs) on April 23, 202014 commented on the
formal recognition that pre-contractual disclosure is challenging timelines of SFDR, particularly in theVOL. 28, NO. 5 • MAY 2021 3
absence of final publication of Level 2 regulations. In or economically or socially disadvantaged
line with the ESAs’ Supervisory Statement,15 EU reg- communities, provided that such invest-
ulators encourage financial market participants and ments do not significantly harm any of
financial advisers to use draft RTS that have been those objectives and that the investee com-
published as a reference for the purposes of applying panies follow good governance practices,
the provisions of the relevant articles of SFDR in the in particular with respect to sound manage-
interim period. ment structures, employee relations, remu-
Meanwhile, we are to wait until the European neration of staff and tax compliance.20
Union fully applies the Taxonomy Regulation,16
which will include additional disclosures for invest- In sum, sustainable investments have two possi-
ments in defined activities. While the regulatory ble objectives—environmental or social—but always
regime recently has been completed with the so- must be accompanied by good governance.
called “April package” on April 21, 2021, which Sustainability risk is defined as “an environmen-
includes the draft EU Taxonomy Climate Delegated tal, social or governance event or condition that, if
Act,17 a proposal for a new Corporate Sustainability it occurs, could cause an actual or a potential mate-
Reporting Directive,18 and six amending delegated rial negative impact on the value of the investment”.
acts19 on fiduciary duties, investment and insurance Meanwhile, sustainability factors mean “environ-
advice, further evolution is still to be expected. mental, social and employee matters, respect for
human rights, anti‐corruption and anti‐bribery
Sustainable Investments, matters.”
Sustainability Risk and
Sustainability Factors Defined Disclosures Required for Asset
The concept of a sustainable investment is not Managers
limited to combatting climate change (that is, hav- SFDR requires the following:
ing an environmental objective), but encapsulates a
broad agenda of potential social objectives, subject ■ A new sustainability risks policy. AIFMs and
always to “good governance practices,” defined as UCITS management companies must publish
follows: on their websites information about the integra-
tion of sustainability risks in their investment
an investment in an economic activity that decision making process.21
contributes to an environmental objective, ■ A business decision on adverse sustainability impact.
as measured, for example, by key resource Further, AIFMs and UCITS management com-
efficiency indicators on the use of energy, panies must disclose if they incorporate sustain-
renewable energy, raw materials, water ability risks in their due diligence process, how
and land, on the production of waste, and they do so, or if they do not, why not (including
greenhouse gas emissions, or on its impact if they do not, when they might do so, in certain
on biodiversity and the circular economy, circumstances).22 For those AIFMs and UCITS
or an investment in an economic activity management companies that do consider sus-
that contributes to a social objective, in tainability risks, at least some of the time for
particular an investment that contributes some of their funds, they must disclose: (a) their
to tackling inequality or that fosters social policies on identification and prioritization of
cohesion, social integration and labor rela- adverse sustainability impacts and indicators;
tions, or an investment in human capital (b) identified principal PAIs and actions taken
Copyright © 2021 by CCH Incorporated. All Rights Reserved.4 THE INVESTMENT LAWYER
or planned; (c) brief summaries of their engage- strategic sustainability target for their activities is
ment policies; and (d) their adherence to respon- based on the necessity to disclose quantitative and
sible business conduct codes, their due diligence qualitative metrics and information, allowing a clear
standards and, where relevant, “the degree of identification of adverse impacts of investments on
their alignment with the objectives of the Paris sustainability. All of this will need to be documented
Agreement.” in a PAI statement.
■ An updated remuneration policy. AIFMs and The Draft RTS require AIFMs and UCITS
UCITS management companies must update management companies to publish quantitative
their remuneration policy to include informa- disclosures on 14 key indicators23 (nine indica-
tion on how their bonus plan is consistent with tors related to climate and environment, while the
the integration of sustainability risks. This link remaining five will cover social, employee, human
between sustainability policy and remuneration rights, anti-corruption, and anti-bribery factors)
policy may not be an easy leap to make, particu- for assessing adverse sustainability impacts of their
larly as the manager’s approach to incorporating investment decisions. There are additional indica-
sustainability risk and factors in remuneration tors applicable to investments in sovereigns and
will be public through website disclosure. While supra-nationals, and investments in real estate
the level of details to be published on one’s web- assets.24 In addition to these key indicators, AIFMs
site is not specified in Level 1 regulation or Level and UCITS management companies must report
2 regulation, fund managers will be left to balance with respect to at least one additional climate or
their disclosure obligations and staff retention. environmental indicator25 and one additional
■ For each fund (whether ESG or non-ESG fund), social, employee, human rights, anti-corruption or
AIFMs and UCITS management companies anti-bribery indicator.26
must: In terms of qualitative disclosures, draft RTS
a. Assess the likely impacts of sustainability risks require the inclusion of:
on the returns of each fund they manage or
(for funds that do not embrace ESG) set out ■ A summary of the PAI Statement including the
the reasons for which they do not consider name of the asset manager, the fact that PAI are
sustainability risks to be relevant for returns considered, the relevant reference period (that is,
of a particular fund; the period from January 1 to December 31 of
b. Disclose whether and how each fund takes the preceding year) and a summary of a maxi-
principal adverse impacts on sustainability mum of two pages;
factors into consideration (if a sustainabil- ■ A description for the reference period of
ity due diligence policy is in place) or dis- adverse impacts of investment decisions on
close an express negative statement for each sustainability factors that qualify as principal,
fund; actions taken during the reference period and
c. Review all marketing materials for all funds that should be taken following the reference
to ensure that they are in line with SFDR period, and historical comparisons with previ-
requirements. ous reference periods;
■ A description of policies to identify and pri-
PAI Statement Regime—What Does oritize principal adverse sustainability impacts,
It Mean? the allocation of responsibility for the imple-
The assessment of the sustainability risks impact- mentation, the date of their approval, descrip-
ing the managers’ results and the definition of the tion of the methodologies to select theVOL. 28, NO. 5 • MAY 2021 5
indicators and description of the data sources Pre-contractual disclosures will need to be made in
used; the offering materials of the fund, typically in the
■ Information on engagement policies and policies form of a prospectus (for UCITS) or AIFMD Article
relating to reducing principal adverse impacts; 23 disclosures, typically included in or attached to
and the private placement memorandum (PPM) (for
■ References to international standards, including AIFs). We think that a number of US fund managers
a description of adherence to responsible busi- will look to Article 6 as something of a “safe haven.”
ness conduct codes, internationally recognized For example, the authors have seen a significant
standards for due diligence and reporting, and number of private credit funds credibly disclaiming
where relevant, the degree of alignment with the sustainability risks as not affecting the creditworthi-
objectives of the Paris Agreement. ness of their portfolio companies within the time
span of their term loans.
Disclosures Required at Fund ESG (or ESG Friendly) Funds
Level—What Kind of Fund Are You? There are two categories of ESG funds, those
In a nutshell, funds in scope will need to assess that (1) promote environmental or social sustain-
the relevance of sustainability risks. Higher stan- ability (Article 8 Funds) or (2) have sustainable
dards of disclosure apply to funds where sustainable investment as an objective (Article 9 funds). Article 8
finance is part of the investment strategy; that is, Funds and Article 9 Funds should provide enhanced
ESG funds. On another note, funds where sustain- disclosures in their prospectus or PPM. Draft RTS
ability risks are considered as relevant but not part specify the form and content of the information to
of the investment strategy will be subject to a lower be disclosed, including through the use of reporting
standard of disclosure. Some funds may side-step templates to be attached as an annex to the prospec-
the bulk of the SFDR’s compliance obligations by tus (for UCITS) or the PPM (for AIFs). Firms that
disclaiming all ESG factors as excluded from their have funds in scope Article 8 or Article 9 will find
investment strategy. that pre-contractual disclosure and PAI reporting
will be quickly overshadowed by the process of mak-
Non ESG Funds ing the detailed disclosures mandated by the RTS.
All AIFMs and UCITs management companies AIFMs and UCITS management companies
have to categorize each of their funds in relation to of ESG Funds are further required to publish and
sustainability risks in one of three categories, named maintain additional sustainability disclosures on
for the SFDR “Article” that describes each fund their websites.
type. Some funds will fall under Article 6 by reason SFDR also requires the publication of disclo-
of being funds that do not deem sustainability risks sures in annual reports with quantitative and quali-
to be relevant. As to those “Article 6 Funds,” pre- tative indicators which demonstrate how the fund
contractual disclosure is required as to the reasons meets its environmental or social characteristics or
that sustainability risk is not considered as part of its sustainable investment objectives. The draft RTS
the investment decisionmaking process. provide a reporting template for ESG funds, which
For those Article 6 funds that do consider need to be annexed to the fund’s annual report. This
sustainability risks as part of the investment deci- reporting template will be a significant undertaking,
sion making process, the manager must disclose certainly the first time through.
how sustainability risks are incorporated and the “Article 8 Funds” are those that promote envi-
likely impact of those risks on investment returns. ronmental or social objectives with respect to
Copyright © 2021 by CCH Incorporated. All Rights Reserved.6 THE INVESTMENT LAWYER
portfolio companies that follow good governance 5. The sources of more information on the fund that
practices. Sustainable investment is not the objective can be found online;
of the fund, but it remains an important aspect of 6. Whether a specific index has been designated as a
the investment process. As to these Article 8 Funds, reference benchmark and its alignment with the
draft RTS specify the content and format of pre- objective of the fund; and
contractual disclosure addressing six specific points: 7. For a fund that has the objective of reducing car-
bon emissions, does the reference benchmark used
1. The environmental or social characteristic pro- by the fund qualify as an EU Climate Transition
moted by the fund and the sustainability indica- Benchmark or an EU Paris-Aligned Benchmark,
tors used to measure the attainment of each of the and if not, how does the fund seek to make a con-
characteristics promoted by the fund; tinued effort of attaining the objective of reduc-
2. The fund’s investment strategy; ing carbon emissions.
3. The fund’s asset allocation;
4. Whether the fund takes into consideration PAI
on sustainability factors for the fund; Risks to US Managers If Fund
5. The sources of more information on the fund that Does Not Live Up to Its SFDR
can be found online; and Declarations
6. Whether a specific index has been designated as US Fund managers that have Article 8 or Article
a reference benchmark and its alignment with 9 Funds will need to take stock of their obligations
each of the characteristics promoted by the under SFDR while being mindful that Investment
fund. Advisers Act Rule 206(4)-8 might apply to any
material misstatement or omission.28 While SFDR
“Article 9 Funds” have a sustainable investment may be aspirational, the Advisers Act prohibits any
as their objective and a reference index has been des- statements that even accidentally (that is, negli-
ignated.27 An Article 9 Fund that has designated a ref- gently) mislead investors. That the SEC recently
erence benchmark is required to provide additional launched a “Climate and ESG Task Force” to pro-
disclosures (that is, how the relevant index is aligned actively identify ESG misconduct further bespeaks
with the investment objective of the fund and a clear caution.29 US advisers will want to consider in
explanation pursuant to which it is demonstrated this context that non-green trades by a green fund
that the relevant index differs from a general market (without any allegation of economic harm) has led
index). An additional layer of regulation will apply to to past enforcement.30 Within the European Union
Article 9 funds that have a reduction in carbon emis- itself, SFDR’s implementation to date has not been
sions as an objective. For Article 9 Funds, Draft RTS accompanied by specific enforcement mechanisms.
specify the content and format of pre-contractual This being said, each Member State is obliged under
disclosures addressing seven specific points: the SFDR to designate its competent national super-
visory authority and vest it with all necessary super-
1. The sustainable investment objective of the fund visory and investigatory powers.31 Accordingly, the
and the sustainability indicators used to measure authors expect that the EU rules applicable to pro-
the attainment of this objective; spectus misstatements would also apply. Given the
2. The fund’s investment strategy; extraordinary depth of detail in the PAI Statement
3. The fund’s asset allocation; disclosure that will soon be required, now is the time
4. Whether the fund takes into account PAI on sus- for US managers to take stock of their obligations in
tainability factors for the fund; respect of their Article 8 and Article 9 funds.VOL. 28, NO. 5 • MAY 2021 7
Practical Tips 3
Indeed, SFDR is not just about environment, but
SFDR is a significant undertaking for managers also about social and governance considerations.
who have “green” or “social” within their investment 4
Defined in the Resolution adopted by the UN
strategies and that intend to or have raised capital in General Assembly on September 25, 2015 -
Europe. After a first deadline on March 10, imposing Transforming our world: the 2030 Agenda for
a principles-based compliance approach with SFDR, Sustainable Development (A/RES/70/1).
you have until the end of the year to get ready to 5
Paris Agreement is an agreement within the United
collect data and reporting in new ways under the Nations Framework Convention on Climate
RTS from January 1, 2022. Given that the final RTS Change (UNFCCC), on climate change mitiga-
likely will be adopted toward the end of the year, tion, adaptation, and finance, adopted at the 21st
there is no choice but to read into the draft RTS. For Conference of the Parties of the UNFCCC on
the rest of the “street,” Article 6 offers something of December 12, 2015.
a safe-haven and even a glance at the draft RTS may 6
The overall regime includes the following:
discourage some US fund managers from venturing • Taxonomy regulation (Regulation (EU) 2020/852
from Article 6. For those advisers in the realm of of the European Parliament and of the Council of
Article 8 or Article 9, the intersection of SFDR and June 18, 2020 on the establishment of a framework
US securities laws counsels “under promising” in all to facilitate sustainable investment, and amending
investor communications, and, ultimately, allowing Regulation (EU) 2019/2088);
the highly detailed reporting under the RTS to speak • the Benchmarks Regulation (Regulation (EU)
for itself during investor due diligence. 2016/1011 of the European Parliament and of the
Council of June 8, 2016 on indices used as bench-
marks in financial instruments and financial con-
Ms. Delabye is a partner of Ogier, Luxembourg. tracts or to measure the performance of investment
Mr. Fross is a partner of Foley & Lardner, LLP. funds and amending Directives 2008/48/EC and
This publication may be considered advertising 2014/17/EU and Regulation (EU) No 596/2014);
for legal services under the laws and rules of pro- as well as amendments to the
fessional conduct of the jurisdictions in which — AIFMD (Directive 2011/61/EU of the
Foley or Ogier practices. The information herein European Parliament and of the Council of 8
should not be used or relied on in regard to any June 2011 on Alternative Investment Fund
particular facts or circumstances without con- Managers and amending Directives 2003/41/
sulting a lawyer. EC and 2009/65/EC and Regulations (EC) No
1060/2009 and (EU) No 1095/2010);
NOTES — UCITS Directive (Directive 2009/65/EC of the
1
Regulation (EU) 2019/2088 of the European European Parliament and of the Council of 13
Parliament and of the Council of November 27, July 2009 on the coordination of laws, regula-
2019 on sustainability‐related disclosures in the tions and administrative provisions relating to
financial services sector. undertakings for collective investment in trans-
2
Most of SFDR obligations (including disclosures on ferable securities (UCITS) (recast); and
website and pre-contractual disclosure obligations) — MiFID II (Directive 2014/65/EU of the European
commenced March 10, 2021. SFDR is supple- Parliament and of the Council of 15 May 2014 on
mented with further details in regulatory technical markets in financial instruments and amending
standards (RTS) that are supposed to enter into force Directive 2002/92/EC and Directive 2011/61/
on January 1, 2022. EU).
Copyright © 2021 by CCH Incorporated. All Rights Reserved.8 THE INVESTMENT LAWYER
7
Recital 12 of the SFDR. 17
Commission Delegated Regulation (EU) …/… of
8
The authors note that all SFDR obligations for XXX supplementing Regulation (EU) 2020/852
AIFMs, UCITS ManCos and their delegates in this of the European Parliament and of the Council by
article also apply to self-managed funds. establishing the technical screening criteria for deter-
9
The authors anticipate that US RIAs whose funds mining the conditions under which an economic
have been purchased in the EU by means of a “reverse activity qualifies as contributing substantially to cli-
solicitation” may be expected to take the view that mate change mitigation or climate change adaptation
SFDR pre-contractual disclosure does not apply to and for determining whether that economic activity
them. causes no significant harm to any of the other envi-
10
The authors understand that national regulators have ronmental objectives (provisional version - C(2021)
communicated with industry participants on the 2800/3).
issue of the application of SFDR to funds that no 18
Proposal for a Directive of the European Parliament
longer offer their shares, with feedback that is not and of the Council amending Directive 2013/34/
uniform, as of this writing. EU, Directive 2004/109/EC, Directive 2006/43/
11
Managers of venture capital funds are also within EC and Regulation (EU) No 537/2014, as regards
scope of SFDR. corporate sustainability reporting (COM(2021) 189
12
Final Report on draft Regulatory Technical Standards final).
with regard to the content, methodologies and pre- 19
See EU Commission’s Website on sustainable finance.
sentation of disclosures pursuant to Article 2a(3), 20
The draft RTS published on 4 February 2021, includ-
Article 4(6) and (7), Article 8(3), Article 9(5), ing a draft of a mandatory reporting template for use
Article 10(2) and Article 11(4) of Regulation (EU) for a statement of “universal adverse indicators” when
2019/2088 developed by European Supervisory considering “(1) adverse impacts on the climate and
Authorities (ESAs) through the Joint Committee other environment-related adverse impacts and (2)
(JC) dated February 2, 2021 and published on adverse impacts in the field of social and employee
February 4, 2021. matters, respect for human rights, anti-corruption
13
ESA Letter Citation-Joint European Supervisory and anti-bribery matters.” The authors note a varia-
Authorities’ Supervisory Statement on the applica- tion between the RTS scope for good governance
tion of the Sustainable Finance Disclosure Regulation (inclusive of anti-corruption and anti-bribery) and
of 25 February 2021 and the Joint Committee of the scope of good governance under SFDR (inclusive
the European Supervisory Authorities letter on of tax compliance).
the Priority issues relating to SFDR application of 21
The level and detail of this disclosure must be
January 7, 2021. enhanced by December 30, 2022 to include a “a
14
Joint ESA consultation on ESG disclosures - From clear and reasoned explanation of whether, and, if so,
23 April 2020 to 01 September 2020. how a financial product considers principal adverse
15
Joint European Supervisory Authorities’ Supervisory impacts on sustainability factors” and annual report
Statement on the application of the Sustainable disclosure of the same.
Finance Disclosure Regulation of 25 February 2021. 22
Disclosure is mandatory from June 30, 2021 for all
16
Taxonomy regulation (Regulation (EU) 2020/852 firms employing 500 or more employees and for
of the European Parliament and of the Council of their parent undertakings. The 500-employee num-
June 18, 2020 on the establishment of a framework ber is an average, measured during the “financial
to facilitate sustainable investment, and amending year,” presumably starting with December 31, 2020
Regulation (EU) 2019/2088). year ends.VOL. 28, NO. 5 • MAY 2021 9
23
Previous draft RTS provided for a list of 32 manda- misleading disclosures in an advertisement defined
tory indicators—this reduced list of indicators is a as a communication made by the adviser to any
relief for the industry. person).
24
See Table 1 of Annex 1 of the draft RTS. 29
See, SEC Press Release March 4, 2021 announcing
25
See Table 2 of Annex 1 of the draft RTS. the formation of the Climate and ESG Task Force
26
See Table 3 of Annex 1 of the draft RTS. of the Division of Enforcement, https://www.sec.gov/
27
The Draft RTS acknowledge that not all funds are news/press-release/2021-42.
index based. As to actively managed funds, under the 30
Investment Advisers Act Release No 2761; Invest
draft RTS it will be possible to “derogate” from the ment Company Act Release 2844 (July 30, 2008)
index requirements. (Failure to properly implement “ESG” type screen-
28
The Advisers Act Advertising Rule 206(4)-1 may ing violated Section 206(2) of the Advisers Act, even
also apply to private offering memoranda used in the in the absence of economic harm).
European Union, if not filed with a regulator, and if 31
In Luxembourg, see bill of law N° 7774 implement-
deemed to be “made” by the Adviser and not by the ing, inter alia, the SFDR.
Fund. See, Advisers Act Rule 206(4)-1(e) (precluding
Copyright © 2021 CCH Incorporated. All Rights Reserved.
Reprinted from The Investment Lawyer, May 2021, Volume 28, Number 5,
pages 1, 4–11, with permission from Wolters Kluwer, New York, NY,
1-800-638-8437, www.WoltersKluwerLR.com
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