SFDR Update June - August 2023
August 28, 2023
This update covers the period from June until mid-August 2023. The main update is that the EU Commission published a Sustainable Finance Package on 13 June 2023. Our view on the main takeaways for Swedish and Norwegian AIFMs is listed below.
Implementation timeline for sustainable finance regulations published by ESMA
On 3 August 2023, ESMA published an updated implementation timeline for sustainable finance related regulations. The timeline can be accessed here.
Permian comment: ESMA publishes updated implementation timelines on regular basis. It is an excellent document to obtain an overview of the sustainability related legislations and their entry into force.
Sustainable Finance Package
The Sustainable Finance Package published on 13 June 2023 covers the following five main areas:
- Proposal on a new regulation for ESG rating providers: this regulation will apply to service providers of ESG ratings and includes a definition of ESG ratings. It does not apply to service providers of ESG raw data. Its entry into force is subject to the EU legislative process.
- Taxonomy delegated acts: the EU Commission adopted the delegated acts that were mentioned in our SFDR Update January – May 2023. Expected entry into force is 1 January 2024.
- Transition finance: this recommendation provides information on how companies can use tools from the EU for transition finance. An example provided in the recommendation is that companies can use the Taxonomy by reporting Taxonomy-aligned capital expenditure (i.e. since this would generally provide for a higher alignment in a transition context than reporting Taxonomy-aligned revenue). In addition, the recommendation includes information that could be included in a transition plan.
- Clarification on the link between taxonomy-alignment and sustainable investment under the SFDR: according to this notice, investments in taxonomy aligned environmentally sustainable economic activities can be automatically qualified as “sustainable investment” under the SFDR (provided that the taxonomy-alignment relates to the entire company and not only a part of the company’s economic activities).
- Staff working document on the Taxonomy: this document includes a summary of the Taxonomy, tools to be used as well as links to other documents related to the Taxonomy.
For further information, please click here.
Permian comment: The package does not include additional reporting obligations on the Manager. For further comments, see below.
- ESG ratings: to be followed-up with any ESG rating provider used by the Manager closer to the regulation’s entry into force. (Please note that the definition of ESG rating providers is not fully clear to us.)
- Taxonomy delegated acts: to be considered for Taxonomy assessments as of 2024.
- Transition finance: to be considered in connection with e.g. preparing a transition plan and for asset managers with a transition finance investment mandate.
- Clarification on the link between taxonomy-alignment and sustainable investment under the SFDR: the practical implication of this clarification is that any investment that has been assessed as taxonomy-aligned can also be assumed qualify as a sustainable investment under the SFDR. This should mean that if you disclose that you have taxonomy-aligned investments, then those investments could also be disclosed as sustainable investments in the periodic reporting. Please note however, that if you use this new presumption, then you should first read the clarification since there are some exceptions (such as when a portfolio company’s economic activities have not all been assessed as taxonomy aligned).
- Staff working document on the Taxonomy: this document could be read as a summary of the Taxonomy and includes some useful links.
Amendment to the Norwegian Regulation under the Sustainable Finance Act
On 13 June 2023, the EEA Committee decided to incorporate Regulation (EU) 2022/1214 into Annex IX of the EEA Agreement. This regulation amends Regulation (EU) 2021/2139, which encompassed a broad range of energy-related activities but lacked technical screening criteria for the fossil gas and nuclear energy sectors, and Regulation (EU) 2021/2178, which fell short in achieving full transparency for these economic activities. With the Amendment Regulation, the fossil gas and nuclear energy activities are now recognized as environmentally sustainable activities with respect to EU’s 6 environmental objectives. The Amendment Regulation has been implemented into Norwegian law in Section 2 of the regulation under the Sustainable Finance Act and came into effect 14 June 2023.
For further information, please click here.
Permian comment: Relevant entities should review how the amendments are applicable to them.
Contacts
Anna Berntson Petas: anna.berntson@permian.se
Thomas Blomgren: thomas.blomgren@permian.se
Felicity Guttormsen: felicity.guttormsen@permian.no
This post contains some key information for the periodic reporting under the Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (the “SFDR”). The periodic report is a mandatory report for all article 8 and article 9 funds under the SFDR.
At Permian, we understand that the complexities of modern investment environments demand robust advisory support, meticulous risk management, and unwavering commitment to compliance. Our specialized services ensure that fund managers and investment companies can navigate these challenges with confidence and focus on achieving their strategic goals.
Permian, Telemos Capital (“Telemos”) , and Highvern are pleased to announce the signing of binding agreements to combine Permian and Highvern to create a leading international funds and private capital services provider. Existing shareholders to re-invest alongside both senior management teams. Together the businesses already operate in 7 jurisdictions with close to 300 employees and plan for further accelerated organic growth as a result of the new combination itself, alongside further expansion into new strategically important markets. Telemos, backed by the Jacobs family, will ensure the new group has the financial support to continue investing in its service offerings, people and technology in order to meet clients’ evolving needs. Already leaders in their respective markets, the Permian and Highvern brands are long-established and have built strong reputations for service quality and the strength of their client relationships. These will remain central to the group’s future values and strategy. Philippe Jacobs, Chairman and Founder of Telemos, and Johan Pettersson, Head of Business Services commented “We are excited to be able to bring these two first rate businesses together and are grateful to both management teams for their trust by choosing us as their partner. By leveraging our sector expertise and international network, we look forward to supporting the management teams with their plans to create a next generation, customer-centric, international funds and private capital services provider.” Marianne Normann, CEO at Permian added that “Following Telemos’ investment in Permian last year this announcement is an early demonstration of the benefits of working alongside forwardthinking partners. Together with Highvern, we are excited to expand our reach and serve our clients in new geographical markets. The combined group will be differentiated in the market by its high-quality service offering enabled by technology, allowing us to grow alongside our clients”. “Family capital is the ideal source of growth funding for an ambitious and respected business like ours” said Martin Hall, CEO at Highvern. “We have got to know the Telemos team closely over the last few years and can be confident that we will continue to serve our clients with the same focus on quality while accelerating our fund administration and private capital service lines in this new combination.” Subject to regulatory approvals the transaction is expected to close by mid-2025. Media contacts
We are excited to announce that Permian Business Partner has been named a Gazelle Company for 2024 by Dagens Næringsliv. This recognition is based on meeting several criteria, including achieving profitability and doubling our turnover over the past four years. Being included on the Gazelle list is an acknowledgment of our growth and the consistent efforts of our team. We are proud of this achievement and deeply appreciate the trust and support of our clients and partners, who have been vital to our progress.
At Permian, our Fund Administration team works behind the scenes to ensure seamless operations for our clients. By managing the backbone of fund operations, we enable fund managers to focus on what they do best. Our team delivers a comprehensive suite of services, including investor and FSA reporting, liquidity management and forecasting where investor calls and distributions are important tasks, investor onboarding where we offer a fully outsourced KYC solution, handling of subscription forms for underlying investments, and coordinating with external advisors when there are several parties involved. In short, we take care of the details so our clients can stay focused on their priorities.
On 13 June 2024, the European Parliament and the Council of the European Union signed the Artificial Intelligence Act ( Regulation (EU) 2024/1689 ) (the “AI Act”). The AI Act provides developers and deployers of AI with obligations regarding the use of AI. The law will apply in EU from 2 August 2026 and work is underway to facilitate rapid implementation in Norway.
At Permian Sweden, everything begins with exceptional fund accounting! We’re proud to have a dedicated team of 20 fund accountants who bring a wide range of expertise, experience, and a strong commitment to delivering an accurate and precise product. Their work is essential in managing our fund accounting and payroll processes, ensuring that we meet the highest standards of accuracy and compliance. We’ve seen firsthand how fundamental accounting missteps can disrupt operations, leading to errors in investor reporting, inaccurate IRR and waterfall calculations, and mistakes in investor payments. At Permian Sweden, we are committed to avoiding these pitfalls by building a strong foundation of precision and accountability in all aspects of our work.
The Digital Operational Resilience Act ( Regulation (EU) 2022/2554 ) , aims to address the increasing reliance on Information and Communication Technology (ICT) in the financial sector and its associated risks. The regulation will apply as of 17 January 2025 in the EU and is expected to be adopted in Norway where timeline is unclear. AIFMs and other affected financial entities should start their preparations.
Permian is excited to announce a series of well-deserved promotions within its Fund Accounting and Fund Administration teams. These advancements not only reflect the remarkable individual achievements of our team members but also underscore Permian’s ongoing commitment to growth, excellence, and innovation in the fund administration sector. The following colleagues are recognized for their well-earned promotions:
NavigatioN
Email us
You can also find us here:
Permian AS © 2024 | Made by Oase