Until now, large asset managers—asset managers with more than 500 employees or the parent undertaking of a group with more than 500 employees—had the option to not comply with the requirement in Article 4 SFDR to publish a statement on their website regarding their due diligence policies with respect to principal adverse impacts of investment decisions on sustainability and ESG factors ("PAI Statement"). Instead, large asset managers have been able to simply explain why they do not consider such adverse impacts. "Sustainability factors" means environmental, social, and employee matters; respect for human rights; and anti‐corruption and anti‐bribery matters. However, per Article 4(3) and Article 4(4) of SFDR, large asset managers, from June 30, 2021, will no longer have an option and will have to publish PAI Statements on their websites. They will also need to implement the due diligence policies underpinning their PAI Statement.

June 30, 2021, therefore, presents a significant shift for large asset managers that have previously opted out of publishing PAI Statements.

PAI Statement—Format and Contents

The high-level obligation in SFDR requires that PAI Statements at least include: (i) information on the identification and prioritization of adverse impacts; (ii) summaries of engagement policies; and (iii) reference to the asset manager's adherence to responsible business codes and other internationally recognized standards.

The Joint Committee of the European Supervisory Authorities has published a final report containing draft regulatory technical standards ("RTS") on the content and presentation of PAI Statements. The draft RTS provide for a mandatory reporting template and a set of indicators for identifying and assessing principal adverse impacts.

The draft RTS show that publishing PAI Statements in line with Article 4 SFDR will involve granular reporting. While large asset managers will need to publish PAI Statements in line with the high-level text of Article 4 from June 30, 2021, the detailed RTS guidance will not come into force until January 1, 2022.