International Fund Management Ltd (IFM) has announced that as an alternative investment fund manager (AIFM), it is fully compliant with the EU’s new Sustainable Finance Disclosure Regulations (SFDR).
SFDR has been introduced to satisfy the appetite for greater clarity and transparency at both AIFM and product levels. While the UK government has not opted to enshrine the SFDR into UK law (at this time), the EU regulation will still have a verifiable impact upon UK firms and products that market into the EU or manage EU-based products.
‘As a result of significant demand from investors around sensitive and sustainable styled products and their investments, coupled with regulation such as SFDR, it is essential for financial services to take measures and embrace these demands,’ said Shaun Robert, director at IFM.
‘We are seeing increasingly more pre-investment marketing materials covering environmental, social and governance (ESG) factors, in an effort to meet investor demand. But it is important that businesses ‘walk the walk’ as well; complying with SFDR demonstrates that we mean business as far as our green credentials are concerned.”
IFM believes that engaging with target issuers and portfolio companies on ESG issues is often a key factor for properly identifying investment opportunities, managing investment risks, monitoring assets in a portfolio, ensuring long term financial and non-financial sustainability.
‘We consider that developments in sustainability disclosures will contribute to a capital shift towards sustainable investments for the benefit of society as a whole,’ said Shaun.
From 10 March 2021 IFM has ensured that:
- It discloses on its website how sustainability risk is integrated into its policies;
- It has explained how consideration may be given to the principal adverse impact of investment decisions on sustainability factors; and
- At a product level, IFM’s clients’ statements include whether a product integrates sustainability risk in pre-contractual disclosure information.
‘At the moment, as SFDR is an EU Regulation, it is not mandatory for Guernsey-based financial services businesses to comply. Equally, if the clients they serve are impacted by the regulation, they may consider opting out, as noted in SFDR as “comply” or “explain”,’ said Shaun.
‘However, what we have learnt is that not only will the EU regulators pull up “greenwashers”, but at the same time, will challenge those considering the “opt out by way of explanation” simply for ease. This shows that there is no shortcut to greener finance, and it is something that financial businesses should be prioritising.’
More information on SFDR is available here.