SFDR and Best Practices for U.S. Funds
NAREIM Sustainability Virtual Meeting: Poll Results and Resources
May 25, 2023
During the NAREIM Sustainability virtual meeting, members took a deep dive on SFDR and best practices for U.S. funds.
This was Part III of an SFDR series NAREIM has produced with the Sustainability committee. See below for a recap of the other virtuals.
Click here for key takeaways and presentation slides for Part I.
Click here for key takeaways and presentation slides for Part II.
Click here for the attendee list.
Click here for poll results.
See below for additional resources mentioned during the virtual:
Article Nein: Why real estate manager are eschewing SFDR’s greenest fund status - PERE, March 2023
In January 2023 INREV published a research paper exploring the implications of SFDR for the non-listed real estate investment industry and how SFDR may distort investment needed for real carbon reduction
WorldGBC and EPRA recently announced collaboration
SFDR recent observations:
Based on guidance from ESMA: Article 9 does not necessary reflect most impactful portfolios because need to have 100% sustainable investments from day 1, however most recent EC guidance has caused even more confusion , stating transition funds can be classified as art 9 fund, managers can set own definition of what is Sustainable investment is as long as the 3 tests are fulfilled 1) meet e/s objective 2) good governance and 3) Do no significant harm test.
Joint consultation paper review of SFDR delegated regulation regarding PAI and financial product disclosures 12 April 2023: the ESAs published a joint consultation paper seeking feedback on changes to the SFDR RTS. Deadline for feedback: 4 July 2023. Rules could be published Q4 this year and would likely not come into force before Q3-Q4 next year.
Extension of list of social indicators for principle adverse impacts. For real estate assets, do you consider relevant to apply any PAI indicator related to social matters to the entity in charge of the management of the real estate assets the FP invested in?
For real estate assets, do you see any merit in adjusting the definition of PAI indicator 22 of Table 1 in order to align it with the EU Taxonomy criteria applicable to the DNSH of the climate change mitigation objective under the climate change adaptation objective?
FP’s would need to provide info on GHGe reduction targets including intermediary targets and milestones, action plans were applicable in ALL SFDR product disclosures.