Introduction
Please make your introductory comments below, if any:

SIFMA AMG welcomes the opportunity to provide the European Supervisory Authorities (ESAs) with feedback on the draft Regulatory Technical Standards (RTS) under the EU Sustainability Finance Disclosure Regulation (SFDR).

SIFMA AMG brings the asset management community together to provide views on U.S. and global policy and to create industry best practices. SIFMA AMG’s Members represent U.S. and global asset management firms whose combined assets under management exceed $45 trillion. The clients of SIFMA AMG Member firms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS and private funds such as hedge funds and private equity funds. For more information, visit http://www.sifma.org/amg.

SIFMA AMG Members appreciate the detailed requirements that the Joint ESAs have provided in the draft RTS and the explanations in the accompanying consultation paper. Nevertheless, there remain some clarifications that would enable SIFMA AMG Members to better understand the logic of the ESAs. We would have two principal questions above all – what is the core purpose of disclosing information – particularly entity-level disclosures? And for the benefit of whom?

Our Members also have concerns that the ESAs’ seeming fixation on achieving comparability may have resulted in overly prescriptive requirements. While we fully appreciate the fundamental need for comparability it is important to acknowledge that full comparability may not be achievable or, if it is achieved, it may come at the expense of other aspects of the disclosures, such as their comprehensibility.

Overall, SIFMA AMG Members believe that introducing some measure of flexibility into the requirements – in the form of greater optionality – whereby entities in scope could disclose the performance of their products on the basis of a subset of the most relevant or practicable Principal Adverse Impact (PAI) indicators – would improve the relevance and value of the disclosures and render them more accessible and meaningful to external stakeholders.

Practically speaking, there are substantial obstacles to applying and complying with the disclosure requirements. At present, there is inadequate data available to calculate and indicate principal adverse impacts on the basis of the metrics proposed by the ESAs. Existing non-financial disclosure requirements will not furnish the necessary data to reliably determine sustainability impacts.

Furthermore, for smaller companies, having to gather data on the ESG impacts of their activities to satisfy the requests of shareholders would be onerous and out of proportion to their size and impact on ESG outcomes. It would also effectively impose significant disclosure requirements on these smaller investee companies and negate the proportionality built-in to the NFRD. The limited territorial scope of the NFRD implies additional challenges for asset managers when engaging with, and gathering the necessary information from, investee companies situated and active outside Europe.

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