On August 23rd, 2023, the Cyprus Securities and Exchange Commission (the “CySEC”) issued Circular C594 on ESMA launches a Common Supervisory Action (‘CSA’) with NCAs on the sustainability-related disclosures and the integration of sustainability risks in the Investment Fund Sector (the “Circular”).
Via to the issuance of the Circular, CySEC wishes to inform Investment Fund Managers* that the European Securities and Markets Authority (the “ESMA”) has launched the 2023 and 2024 Investment Fund Sector Common Supervisory Action (the “CSA”) on the sustainability-related disclosures and integration of sustainability risks.
The aim of the CSA is set as follows:
- to assess the compliance of supervised asset managers with the relevant provisions in the Sustainable Finance Disclosure Regulation (SFDR), the Taxonomy Regulation and relevant implementing measures, including the relevant provisions in the UCITS and AIFMD implementing acts on the integration of sustainability risks,
- to assess whether market participants adhere to applicable rules and standards in practice,
- to gather further information on greenwashing risks in the investment management sector,
- to identify further relevant supervisory and regulatory intervention to address the issue.
In the context of the CSA, CySEC is planning to engage in relevant supervisory actions on samples of Investment Fund Managers, in order to assess compliance regarding the integration of sustainability risks and disclosures.
For the purposes of the CSA 2023, the following regulatory framework will be considered (‘the Regulatory Framework’):
- Commission Delegated Regulation (EU) 2021/1255
- Commission Delegated Directive (EU) 2021/1270, transposed into national legislation pursuant to CySEC’s Directive DI78-2012-03 (available in Greek)
- SFDR Regulation (EU) 2019/2088
- Commission Delegated Regulation (EU) 2022/1288
- Taxonomy Regulation (EU) 2020/852
- ESMA Supervisory Briefing on Sustainability risks and disclosures in the area of investment management (ESMA 34-45-1427)
- Q&A related to SFDR Regulation (EU) 2019/2088
- ESMA Consultation Paper on Guidelines on funds’ names using ESG or sustainability-related terms (ESMA34-472-373)
- Joint Consultation Paper on the Review of SFDR Delegated Regulation regarding PAI and financial product disclosures (JC 2023 09)
CySEC expects Investment Fund Managers to adhere the content of the Circular and get well attained with the content of the Regulatory Framework in order to ensure their compliance with the applicable legal obligations regarding the integration of sustainability risks and disclosures.
Should you require any further assistance and/or clarification in respect to the abovementioned, please do not hesitate to contact us.
*Investment Fund Managers:
i. Cyprus UCITS Management Companies and Self-Managed Cyprus UCITS (“UCITS MCs”)
ii. Cyprus Alternative Investment Fund Managers and Self-Managed Cyprus AIFs (“CAIFMs”)
