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By Frank van Kuijk, Benjamin Hitzges and Sebastiaan Hooghiemstra from Loyens & Loeff, an international law and tax firm headquartered in Rotterdam.

The Sustainable Finance Disclosure Regulation (SFDR) applies to US AIFMs when marketing an AIF to EU investors. In instances where it does not apply, certain EU investors themselves subject to SFDR may contractually impose equivalent standards to the US sponsor in order to meet their own obligations. SFDR is consequently relevant for any US fund manager ("USFM") dealing with EU investors.

The scope of these disclosures varies depending on whether the AIF aspires a "grey" (article 6 SFDR), "light green" (article 8 SFDR) or "dark green" (article 9 SFDR) status.

A "dark green" AIF must only pursue sustainable investments that contribute to an environmental or social objective and do not cause significant harm to such objectives. A "light green" AIF promotes environmental and/or social characteristics. Other AIFs are "grey".

USFMs that intend to tap into the EU investor market will encounter that EU investors prefer the green type of AIFs or have pockets of capital specifically dedicated to green AIFs. Green AIFs generally give a competitive edge in terms of EU branding and EU fundraising.

If a USFM intends to offer a green sleeve or feeder fund of a US fund to EU investors, it would in principle be expected for the other sleeves or the relevant US master fund to be subject to the same inv......................

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