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EU ESG consultation

On 23rd April, the three European Supervisory Authorities (ESAs), the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA) issued a consultation on the proposed Regulatory Technical Standards (RTS) for ESG disclosure. The regulation to which the RTS relates, the Sustainable Finance Disclosure Regulation “SFDR” was published on 27th November 2019. It sets out  provisions for sustainability reporting that will apply to organisations regulated under AIFMD, Solvency II and other EU investment regulation.


The RTS is potentially a major issue for the real estate investment management industry. Real estate fund managers are caught by the regulation as it catches anyone within AIFMD, but the structure of the reporting framework makes it impossible for funds investing in direct property to comply. Even managers who are not caught may have to comply (in theory but impossible in practice) as their investors may be caught as it applies to European insurers (under Solvency II) and pension funds (institutions for occupational retirement provision - IORP II). The position in the UK is potentially even more complex as the UK has imported the SFDR into UK law but not the RTS.


John has coordinated an industry response arguing that real estate as an asset class should be excluded until a workable framework for reporting direct property can be developed, drafting the Association of Real Estate Funds (AREF) and Investment Property Forum (IPF) responses to the consultation, and coordinating with the Investment Association (IA) INREV, GRESB and the BVCA on their responses.


The submissions were submitted at the start of September and we are awaiting the ESA response. We will include updates in our regular newsletters. You can subscribe here.




AREF response


AREF in its response outlined the technical issues that would prevent real estate investment managers complying. You can find the AREF response here.


IPF response


The IPF in its response concentrated on existing ESG reporting frameworks for real estate, referencing a new IPF study in this area published in August.  You can find the IPF response here and the IPF referenced report here.

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