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Authored by Beth Sasfai, Emma Bichet, Selma Abdel-Qader and Steven Holm from global law firm Cooley LLP.

We're increasingly speaking to clients in the US, Asia and elsewhere who are surprised by the intensity of environmental, social and governance (ESG) requests and covenants coming from their investors. Often these requests stem from the disclosure obligations imposed on investors by the European Union's Sustainable Finance Disclosure Regulation (SFDR). Don't be caught off guard - read our FAQ below.

1. What are the European financial sustainability disclosure rules?

The SFDR began to apply in 2021, although many of its obligations only became mandatory in 2022 and 2023. It requires fund managers and other financial market participants to make certain disclosures on their investment decisions and financial products, including the extent to which sustainability information is taken into consideration in investment decision€making and advisory processes.

One of the main objectives of the SFDR is to make it easier for investors to distinguish and compare financial products available in the EU.

2. To whom does the SFDR apply?

The scope of the SFDR is relatively broad, and most EU-based fund managers and investment advisers are required ......................

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