More than half of fund managers are still to provide relevant data for ESG products to meet the MiFID II regulatory deadline of August 2, research suggests.
MiFID II requires any sustainability preferences of investors to be taken into account during advisory processes for fund managers’ products marketed in the EU.
Data from FE fundinfo shows that fund managers are “still grappling” with this challenge a week before the deadline looms for the relevant EU delegated acts, with “more than half of fund groups” still to submit their data.
The data is also a requirement of the Insurance Distribution Directive.
To facilitate the exchange between fund managers and fund distributors, the European ESG Template (EET) was created.
To meet the requirements of MiFID II, fund groups should complete both the relevant fields in the EET and also the European MiFID Template (EMT), for which Version 4.0 is about to go live, said FE fundinfo. While the sustainability information is in the EET, groups still need to supply the remaining target market indicators and the costs and charges of their funds, the firm said.
The firm added that the EET is especially relevant for funds classified as Article 8 (“light green”) or Article 9 (“dark green”) in accordance with the Sustainable Finance Disclosures Regulation (SFDR) but is also relevant for Article 6 (“traditional”) funds. Even though Article 6 funds are not likely to satisfy a client’s sustainability preferences, they are expected to report the EET.
“It is interesting to note that almost half of the completed EETs to date is for those funds,” the firm said.
The EET is made up of a total of 580 mandatory, conditional and optional fields, with additional country-specific requirements making things more complex at a fund and underlying individual share class level.
Furthermore, from January 1, 2023, and due to the SFDR, additional fields will become mandatory to meet annual SFDR reporting requirements.