ALFI position paper on the calibration of the depositary duties as regards the monitoring of ESG investments

The ALFI position paper is primarily aimed at reacting at §46 of ESMA May 2022 supervisory briefing on sustainability risks and disclosures in the area of investment management, regarding depositary duties.

Key principles developed:

1. Depositaries are not in scope of SFDR, as they are not “financial market participants”;
2. The Depositary should perform the oversight on simple limits, and then if applicable, apply the procedure for complex limits when they are considered as non-simple, as described in the paper;
3. Where taxonomy or sustainable investment data are not available to allow quantitative ESG-related limits checks by the Depositary, the Depositary should receive appropriate data or all relevant information from the IFM;
4. Depositaries should include ESG-related limits monitoring as part of their due diligence on IFMs;
5. Depositaries are not responsible for challenging classification of funds as Article 6, 8 or 9 under SFDR.

View the ALFI position paper.