Investment fund managers and their investment funds under management need to start preparing for the application of the Disclosure Regulation1 on 10 March 2021.

The application of the Disclosure Regulation is staggered, with most disclosure requirements applying from 10 March 2021.

It governs the transparency requirements of financial market participants (which includes UCITS management companies and AIFMs) regarding the integration of sustainability risks into investment decisions, the consideration of adverse sustainability impacts and the disclosure of ESG and sustainability-related information.

The relevant disclosures under the Disclosure Regulation will need to be made i) on the investment fund manager's website, ii) pursuant to the investor disclosure requirements of Article 23(1) of AIFMD or in the UCITS prospectus and iii) in the fund's annual report.

A first set of obligations applies to all investment fund managers (i.e. not only those managing ESG funds or funds with a sustainable investment objective). The Disclosure Regulation requires all investment fund managers to disclose, for all investment funds that they manage, the manner in which sustainability risks are integrated into investment decisions and the results of the assessment of the likely impacts of sustainability risks on the returns of the relevant funds, or if not deemed relevant, the reasons why.

Additional disclosure requirements apply to investment fund managers in respect of investment funds which i) promote environmental or social characteristics or ii) have a sustainable investment objective.

The Taxonomy Regulation2 creates a universal framework of activities that qualify as environmentally sustainable. It amends the Disclosure Regulation and creates additional disclosure requirements.

On 8 June 2020, a draft proposal to amend the UCITS Level 2 measures3 as well as the AIFMD Level 2 measures4 was published by the EU Commission ("Delegated Acts"). The proposed amendments to the UCITS Level 2 and AIFMD Level 2 measures incorporate concepts defined under the Disclosure Regulation regarding the integration of sustainability risks and sustainability factors into existing organisational and conduct rules applicable to investment fund managers. The Delegated Acts also clarify other implications of the Disclosure Regulation for investment fund managers such as the consideration of principal adverse impacts of investment decisions.

In order to help you navigate through the applicable legal texts, an interactive compilation of the Disclosure Regulation is available on our website. By using the electronic version of this compilation, you will have direct access to a consolidated version of the Disclosure Regulation and the draft level 2 disclosure text ("Draft Implementing Regulation")5 as well as the relevant articles of the Taxonomy Regulation and the annexes of the Draft Implementing Regulation. The European Commission's proposals to amend the UCITS and AIMD level 2 measures are also included.


1. Regulation (EU) 2019/2088 of 27 November 2019 on sustainability-related disclosures in the financial services sector, as amended.

2. Regulation (EU) 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending the Disclosure Regulation.

3. EU Commission proposal for a Delegated Directive (EU) .../... of XXX amending Directive 2010/43/EU as regards the sustainability risks and sustainability factors to be taken into account for UCITS.

4. EU Commission proposal for a Delegated Regulation (EU) .../... of XXX amending Delegated Regulation (EU) 231/2013 as regards sustainability risks and sustainability factors to be taken into account by AIFMs.

5. The Draft Implementing Regulation is included in a Consultation Paper published by the European Supervisory Authorities (ESAs) (Ref: 2020 16) in April 2020. The consultation closed on 1 September 2020. The next steps are the submission of a final report on those implementing measures by the ESAs to the EU Commission and the formal adoption by the EU Commission (not expected before December 2020-January 2021).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.