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Luxembourg CSSF update on the application of the EU Sustainable Finance Disclosure Regulation (SFDR) and draft Regulatory Technical Standards (RTS)

  • Luxembourg
  • Financial services and markets regulation - ESG
  • Investment funds and asset management
  • Financial services


The Luxembourg Financial Supervisory Authority (the “CSSF”) published a communication on the application of Regulation (EU) 2019/2088 on the sustainability-related disclosures in the financial services sector (“SFDR”) on 12 March 2021 (the “Communication”). 

The Communication refers financial market participants (“FMPs”) to the Supervisory Statement on the application of SFDR made by the Joint Committee of European Supervisory Authorities (“ESAs”). In the statement recommends that the draft Regulatory Technical Standards (“RTS”) be used as a reference when applying provisions of SFDR in the interim period between 10 March 2021 and the date the RTS come into force. The draft RTS were included in the ESAs’ final report published 5 February 2021 (the “Final Report”).

SFDR into force but without any RTS

The majority of SFDR provisions came into force on 10 March despite the RTS not yet having been adopted. To give FMPs time to prepare to meet the RTS requirements, the Final Report proposes a commencement date of 1 January 2022.

Areas of uncertainty

The CSSF identifies a number of provisions of SFDR which are ambiguous and thus difficult to apply. These include:

  • the application of the SFDR to non-EU and registered alternative investment fund managers (“AIFMs”)
  • the application of principal adverse impact reporting where the threshold of 500 employees is triggered in the context of a thinly staffed parent undertaking of a large group
  • the concept of promotion in the context of the application of article 8 SFDR (promotion of products with environmental or social characteristics)
  • the application of Article 9 of SFDR
  • the application of SFDR product rules to portfolios and dedicated funds

The ESAs identified these points as priorities for clarification in a letter to the Commission dated 7 January 2021. At the time of writing, the Commission has not yet responded.  

Guidance during the interim period

In line with the supervisory statement, the CSSF encourages financial market participants to refer to the draft RTS when applying the ambiguous provisions of SFDR (especially articles 2a, 4, 8, 9, and 10) pending the formal adoption of the RTS.

The CSSF acknowledges that the draft RTS may be subject to further revision before adoption but nevertheless recommends FMPs get acquainted with the RTS and prepare to apply them from 1 January 2022.

Timeline for entity-level principal adverse impact statements

The CSSF notes that under the draft RTS, when the principal adverse sustainability impact statement is published for the first time, there is no requirement to make disclosures about the previous reference period. Accordingly the earliest disclosures will not be made until 2023 in respect of reference periods relating to 2022.

The timeline for product disclosure in periodic reporting

The CSSF also refers to the detailed content and presentation requirements of product reporting under Chapter V of RTS. In the Final Report, the ESAs argue that a 1 January 2022 commencement date will be excessively burdensome for FMPs and suggests commencement be pushed back to 1 January 2023, which would mean periodic reports published in 2022 in relation to reference periods starting before 1 January 2022 would only need to apply the high-level principles laid down in article 11(1) SFDR.

How Eversheds Sutherland can help


From interpretation and implementation of the new laws, to identifying in-scope products and crafting disclosures, our team is on hand to provide support. If you have queries on how this latest announcement impacts your business, or would like broader guidance on the new SFDR obligations, please get in touch.