CEO
The European Commission yesterday confirmed that it intends to delay the next round of the Sustainable Financial Disclosure Regulations, otherwise known as Level 2 RTS rules, by six months.
Although the Level 1 rules went live on 10 March, the far more stringent Level 2 technical standards, which include granular reporting, were due to go live on 1 January 2022, giving asset managers scant time to ensure they’re fully compliant with the new requirements.The tight deadline had attracted concerns, with The European Fund and Asset Management Association (Efama) calling for a one year transitional period for the Level 2 rulesback in May.
While the six months extension fell short of a one year transition period, it is nonetheless a welcome development, particularly as rumours were swirling that a delay may be imminent.Crucially, the European Commission’s announcement did not mention that it plans to defer the implementation of the Taxonomy Regulations, a parallel tool that was also set to go live on 1 January 2022. But with a public consultation on the Taxonomy being concluded in May 2021, with a final report expected this month, and with the Commission pushing back the implementation of the Level 2 RTS rules, it now appears likely that the Taxonomy itself will be similarly deferred for six months.
This gives managers some much-needed breathing room as they tackle the challenges of data collection, data integration, investment classification, and reporting. While compliance teams may be breathing a sigh of relief, there still remains a huge amount of work to get ready for the new rules in July 2021.