The European Union has postponed the second phase of the Sustainable Finance Disclosure Regulation (SFDR) until 1 July 2022. Phase two of SFDR was set to apply on 1 January 2022 and would require additional detailed entity and product level 2 disclosures, including the Principal Adverse Impacts Statement (PAI).

The European Commission stated in a letter dated 8 July 2021 addressed to the Ecofin Council and the Committee on Economic and Monetary Affairs, that the draft regulatory technical standards (RTS) under the Sustainable Finance Disclosure Regulation (SFDR) could not be adopted within the required three-month period.

“Due to the length and technical detail of those regulatory technical standards, the late submissions to the Commission, and envisaged amendments, we deem it necessary to facilitate the smooth implementation of the standards by product manufacturers, financial advisers and supervisors.” indicated in this letter John Berrigan, head of the European Commission’s financial services unit.

Therefore the European Commission plans to bundle all 13 of the regulatory technical standards in a single delegated act and defer the dates of application of 1 January 2022 by six months to 1 July 2022.