FundPartner AM
Société de Gestion de fonds d'investissements alternatifs spécialisées dans le capital investissement, l'immobilier et la dette privée.
ID: 025940052178-79
Lobbying Activity
Response to Revision of EU rules on sustainable finance disclosure
28 May 2025
CONTEXT The implementation of the Sustainable Finance Disclosure Regulation (SFDR) has been a learning process due to its lack of clarity. Key challenges faced by funds in achieving ESG compliance include: - Unclear definitions/concepts or confusion on ESG terminology (Sustainable finance, DNSH/PAI), - Lack of harmonized and verified ESG data for Startups, SMEs and Real Estate, - An evolving reporting template and regulatory landscape, - Ongoing European and domestic Q&As as well as the emergence of new guidelines. Market participants have treated SFDR categorisation as a label. Investors and sponsors now often require Article 8 or 9 funds to meet their own disclosure obligations. This focus on reporting generally overshadows the investment strategy itself. Investing in Article 8 funds lacks clarity, as comparing ESG characteristics among these funds is challenging due to diverse investment strategies and methodologies. Revising the SFDR approach is welcome, though it would have been beneficial to consider this earlier. As European Institutions focus on the value for money of investment products for end-users, it's important to recognize that regulatory changes incur costs for investors, even if they may benefit society in the long run. The impact on investors should always be considered, which is currently not the case. For instance, increasing regulatory complexity makes it difficult to explain to retail investors, which is concerning. It is particularly the case when, under MIFID II including the relevant ESMA guidelines, the key concepts need to be explained to investors when performing investment services. CONSIDERING SPECIFICITIES OF PRIVATE EQUITY AND REAL ESTATE Given the current European Commissions political priorities, including finalizing a single financial market and supporting SMEs and the role of non-listed assets (e.g., SMEs, infrastructures, real estate) in Europes sustainable development transition, there is a call for better consideration of the specificities within SFDR 2.0.of Alternative Investment Fund Managers (AIFMs) investing in non-listed assets.The current SFDR was drafted with CSRD or UCITS in mind, overlooking the characteristics of venture capital, private equity, and real estate funds. Venture capital funds invest in start-ups where ESG considerations are rarely measurable at the time of investment. The positive impact is typically measurable only after several years. Venture capital funds also play a role in guiding start-ups / SMEs to adopt the best ESG practices. They play a significant role in the transition of the economy. However, changing reporting requirements can create difficulties when investing in non-listed companies. Reporting is usually negotiated at the time of investment by the lead investor. For minority investors, it is often impossible to require specific reporting, adhering to a "take it or leave it" principle. If the SFDR is revised, it is important to grant a grandfathering period for funds do not open to new subscriptions and for future investments. CATEGORISATION MECHANISM We support introducing a financial product categorization mechanism within SFDR 2.0. We advocate for minimum requirements that allow financial products to be categorized appropriately, tailored to the operating models of non-listed funds and the realities of investing in unlisted assets, including real estate. INFORMATION AT ENTITY LEVEL There are several provisions of SFDR that require to disclose specific information at entity level SFDR articles 3 to 7. These requirements do not add value for most AIFMs, especially Third-Party Management Companies. Investors are more interested in the investment strategies of the funds rather than the overall policies of the management company. Disclosure at the entity level should be removed or made optional.
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