How will the Sustainable Finance Disclosure Regulation (SFDR) affect Real Estate Fund Managers?
The Association of Real Estate Funds ESG & Social Impact Investing Committee recently launched The AREF ESG 5 Year Roadmap, in collaboration with Carbon Intelligence.
This series features six exclusive short films that explain when you will be affected by incoming regulation or market change and how you can prepare. There will be leaders and laggards in the race to zero and those who embrace responsible investing will come out on top.
This video features Paul Mora, Senior Regulatory Developments Analyst at Columbia Threadneedle and Nina Reed, Head of Responsible Investment at M&G Real Estate.
Key Takeaways from Columbia Threadneedle
- SFDR and the Taxonomy will still apply to UK asset managers that distribute funds in Europe
- SFDR introduces three changes for asset managers:
– March 2021: Sustainability risk to be integrated into investment processes
– January 2022: Identification and prioritisation of principle adverse impacts to sustainability indicators
– New disclosures for funds that either promote environmental or social characteristics, or have a sustainable investment objective
- The Taxonomy establishes a new disclosure framework to determine whether a fund is environmentally sustainable
Key Takeaways from M&G Real Estate
- SFDR & EU Taxonomy will introduce comparable standards that allow funds to clearly differentiate themselves in the market
- These new regulations are complex. There will be a long adjustment period and refinement of the criteria over the next few years
- The adjustment period will hopefully result in the criteria becoming meaningful, simple to use indicators that funds are consistently reporting against
- This is the start of greater disclosure, greater transparency and greater comparability across the market in ESG performance
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