Secondly, when reviewing all of the moving parts of SFDR, the asset management community needs to be considering the cost and time burden on in-house resources.
SFDR is one of the largest pieces of ESG-related legislation rolled out anywhere in the world, and compliance requirements are extremely timely and costly processes.
Firms trying to go at it alone may not be opting for the most time and cost-effective method.
Furthermore, SFDR reporting does not provide a competitive advantage for the asset management community, and as with other regulatory reporting it should embrace the outsourcing of SFDR regulatory reporting and data management functions to third-party specialist service providers.
Through outsourcing, asset managers can future-proof their SFDR reporting processes and be prepared for whatever course this regulation takes.
Looking ahead
There is no doubt that we will continue to see the debating and evolving of SFDR reporting requirements and the labelling of ESG categories throughout this year.
It is critical for the asset management industry as a whole to not only meet the requirements of the SFDR regulation, but also consider how effectively what is reported actually represents reality.
Although the road ahead may be a little bumpy, the asset management community needs to stand strong on its promises of quality and integrity when it comes to meeting SFDR requirements and ensuring ESG funds deliver on their sustainability goals.
Afzal Amijee is commercial director of Broadridge Fund Communication Solutions
