EU Action Plan for Sustainable Finance – implementation of SFDR and Taxonomy Regulation

by Marc-André Bechet, Deputy Director General

By 10 March 2021, investment funds and asset managers had to comply with the main provisions of the SFDR[1].

The baseline requirement is that all investment funds shall describe in their prospectuses how sustainability risks are integrated into their investment decisions.

Asset managers who wish to offer products in which sustainability becomes the core focus have two options. Investment funds which promote environmental and/or social characteristics are categorised as article 8 products. As a second option, investment funds with a focus on sustainability qualify as article 9 products.

ALFI has been responding to no less than nine consultations from the EU and the ESAs over the period under review, thanks to the input from its six Responsible Investing working groups, with more than 100 participants.

In the autumn of 2020, ALFI collected questions from its members which were shared with the CSSF and discussed in different meetings. It is interesting to note that some of these questions are in fact being raised by the ESAs in their letter to the EC of 7 January 2021.

In addition, ALFI published guidelines on SFDR-related pre-contractual disclosures in January 2021 to assist its members in complying with the requirements of SFDR. The publication was followed by a very well-attended expert briefing in February.

The working groups’ focus is currently on the implementation of the templates for pre-contractual and period disclosures for article 8 and article 9 investment products, the Commission Delegated Acts as regards the sustainability risks and sustainability factors, amending the UCITS Directive and the AIFMD, and the Corporate Sustainability Reporting Directive.

Sustainable Finance in Luxembourg

As part of its Ambition 2025, ALFI is committed to developing sustainable finance education for the industry and individual investors. As such, ALFI fully supports various educational programmes and in particular the Sustainable Finance Certificate offered by the University of Luxembourg, with which it has a regular exchange of views.

ALFI welcomes the decision of the Luxembourg government to introduce new reduced rates of subscription tax for funds investing a certain minimum percentage of their net assets in sustainable economic activities as defined in the Taxonomy Regulation. The implementation of the law requires additional clarification on a number of practical considerations, in particular on the conditions under which investment funds can already avail of the reduction in 2021. Discussions are held within the relevant ALFI working groups as well as with public bodies.


The definition of ESG and sustainable data, templates, collection, aggregation and dissemination of data are new challenges for the industry as well as for investee companies.

The EC is conscious of the need to improve access to financial and non-financial information from companies. It suggests building a European Single Access Point (ESAP). The overall objective of the ESAP is to facilitate the flow and use of information, to make it machine-readable, to reduce search and processing costs and to foster interoperability. The ESAP also has the potential to support the EU climate and environmental objectives and the sustainable finance agenda by enabling better access to ESG information.

ALFI is supportive of different industry bodies such as FinDatEx, a European initiative to create European ESG related templates and an ESG Data Definition Inventory (EDDI) aiming to capture transaction-related ESG data requested under relevant existing and upcoming EU regulatory requirements.

[1] Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‚Äźrelated disclosures in the financial services sector.