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How to prepare for SFDR and TCFD

By Hannah Morris
8th March 2021

Key dates and checklist for upcoming mandatory climate and ESG reporting


The European Union has initiated an ambitious legislative programme to make environmental, social and governance (ESG) concerns a central part of regulation in the financial services industry. The SFDR, also known as the anti-greenwashing regulation, is part of the European Union’s sustainable finance package of legislation and is specifically aimed at financial firms and their performance across a broader range of ESG practices; the elements that effectively grant a company a licence to operate with its stakeholders.

These tougher reporting regulations mean asset managers are now under a huge amount of pressure to assess climate impact and business resilience in much greater detail than before. However, far from it being a risk, this can be a strong source of value creation. So when will firms need to comply with these new regulations and what actions should asset managers do now to comply?


Key Dates


There are two levels to SFDR. The first is effective from March with the initial investment manager and fund-level disclosures. From next year it is expected there will be the additional requirement to measure specific ESG performance of the  underlying assets. This could be onerous  for asset managers and investors as it will require disclosing granular detail, which the asset managers often don’t have a great deal of insight into or control over.


Checklist: What should asset managers be doing now to comply by the deadlines?

  1. Scoping: entity and product level: assess whether they are in scope of the new requirements
  2. Carry out an assessment on whether the firm or its products are currently promoted as an ESG or sustainable product, which would trigger additional requirements
  3. Consider how the firm will market funds and products going into 2021, as this will impact the level of disclosure requirements
  4. Form project groups
  5. Start to formalise and document processes
  6. Start working on a roadmap for compliance with the new regime, with a particular focus on the disclosure requirements coming into force from March 2021
  7. Drafting initial disclosures


There is no doubt that SFDR reporting will require a lot of new work, particularly for smaller firms. However, firms that fail to do this effectively could see a significant customer and regulator backlash. Firms who prioritise climate-resilient ESG performance at a board-level will ultimately have the competitive advantage, and will see the lasting value it creates.

SFDR is changing the direction of ESG, and we can help you on this journey. Carbon Intelligence can help you assess how you respond to the regulations, handle reporting and collect the data you will need to monitor.  We work with companies to develop and deliver their net zero strategies and regulatory reporting including TCFD and SFDR. Contact us to talk about how we can help.


Read more:

James Hilburn, Director of Financial Services explores how mandatory climate and ESG reporting can support fund performance in this article.

Download the Sustainable Investing report published in The Sunday Times.