29
Fri, Mar
51 New Articles

Supervisory Briefing to Ensure Convergence in the Supervision of Investment Funds with Sustainability Features and in Combating Greenwashing

Supervisory Briefing to Ensure Convergence in the Supervision of Investment Funds with Sustainability Features and in Combating Greenwashing

Hungary
Tools
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

On 31 May 2022 the EU’s securities markets regulator, the European Securities and Markets Authority (ESMA), published its supervisory briefing to ensure convergence in the supervision of investment funds with sustainability features, and in combating greenwashing by investment funds.

Sustainability is a fast-growing area of investment management, so the work aims to provide guidance for convergence on the supervision of sustainability related disclosures, as well as the supervision of how fund managers integrate sustainability risks in their organisational framework and decision-making process. Although the supervisory briefing is non-binding, it provides a useful reference point for market participants and helps to combat greenwashing by establishing common supervisory criteria for national competent authorities (NCAs).

The supervisory briefing covers the verification of the consistency of information in the fund documentation and marketing material, includes presentation of disclosures, fund names, sustainable investment policy and objectives, and investment strategy. For example, the fund documentation should contain a sustainable investment policy and/or objectives, and the fund management should be in-line with that.

The supervisory briefing also focuses on the verification of the compliance with the website and periodic disclosures’ obligations. According to the regulation, fund managers shall publish information on a separate section titled “Sustainability-related disclosures” on the website, and should clearly identify the financial product and remarkably display the environmental or social characteristics, or the sustainable investment objective. Moreover, the supervisory briefing suggests to NCAs to create a checklist based on the information provided in periodic reports.

The additional supervisory action ensures NCAs that all relevant information and data get to the depositaries, which should include all ESG-related investment restrictions in the monitoring of the compliance of the instructions. According to the supervisory briefing, administrative measures may apply in order to combat greenwashing such as in the case for instance, when the SFDR (Regulation 2019/2088 of the European Parliament and of the Council) disclosures are viewed as severely misleading or sustainability risks have not been integrated.

By Krisztian Brody, Attorney at Law, KCG Partners Law Firm

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

Firm's website.

Our Latest Issue