The Sustainable Finance Disclosure Regulation (SFDR), a cornerstone of the European Commission’s
Action Plan on Sustainable Finance, came into effect on March 10 th , 2021. The new rules should
improve sustainability related disclosure in the financial sector and applies to financial market
participants 1 ranging from asset managers to financial advisors 2 . The aim is to trigger behavioural
changes, to discourage greenwashing and to promote sustainable investments.
Why is this EU regulation also important for Switzerland?
It applies to EU financial market participants, but also to non-EU Financial market participants (and
their subsidiaries) who do business in the EU or sell products to the EU, and non-EU companies that
sub-manage EU assets or funds.
As of 10 th March, financial market participants and financial advisors need to comply with the level 1
SFDR requirements, meaning that the financial market participants are required to provide
information at “entity level” on their public website. Speaking about “product level” information,
additional information in the pre-contractual documents and periodic publications is required to be
included. Hence, according to the SFRD financial products are divided in categories as following:
“Light Green” Products – products that are promoting environmental or social
characteristics or article 8 SFDR
“Dark Green” Products – financial products that already set a sustainability objective
– Article 9 SFDR
The rest of the financial products are categorised under the Article 6 – products that
are not sustainable or do not consider sustainability
1 Financial market participant’ means:
(a) an insurance undertaking which makes available an insurance‐based investment product (IBIP);
(b) an investment firm which provides portfolio management;
(c) an institution for occupational retirement provision (IORP);
(d) a manufacturer of a pension product;
(e) an alternative investment fund manager (AIFM);
(f) a pan‐European personal pension product (PEPP) provider;
(g) a manager of a qualifying venture capital fund registered in accordance with Article 14 of
Regulation (EU) No 345/2013;
(h) a manager of a qualifying social entrepreneurship fund registered in accordance with Article 15 of
Regulation (EU) No 346/2013;
(i) a management company of an undertaking for collective investment in transferable securities
(UCITS management company); or
(j) a credit institution which provides portfolio management;
2 Financial adviser’ means:
(a) an insurance intermediary which provides insurance advice
(b) an insurance undertaking which provides insurance advice
(c) a credit institution which provides investment advice;
(d) an investment firm which provides investment advice;
(e) an alternative investment fund manager which provides investment advice
(f) a management company of an undertaking for collective investment in transferable securities
which provides investment advice
Additionally, how sustainability risk is taken into consideration and its potential impact on returns is
required to be explained. At “entity level” information should be published on the public websites of
the financial advisors as well.