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Navigating Sustainability

07.06.2024 | Publications

Sustainability, as part of the broader environmental, social, and governmental (“ESG”) movement, is becoming an increasing popular metric on which investors will base their decisions.

Over the last few years, in order to get a handle on and level the playing field in the now burgeoning market for sustainable investments, there have been an increasing number of efforts made by regulators and law makers to develop disclosure standards.

The European Union (“EU”) made waves with the Sustainable Financial Disclosure Regulation (“SFDR”) with the aim of improving clarity and comparability of sustainability disclosures for investment policies and products by participants in financial markets.

The United Kingdom (“UK”) has begun the process of developing its own requirements for sustainability disclosures, the catchily titled the Sustainability Disclosure Requirements (“SDR”), with the aim of reducing green-washing, promote accurate labelling of products, and increase availability and standardisation of information relating to sustainability.

How the SFDR and the SDR, which both have different requirements, processes and outcomes, will interoperate remains to be seen.

Gibraltar is currently going through an alignment programme with the UK (the Gibraltar Authorisation Regime (“GAR”)) in which the GFSC is undertaking work to bring Gibraltar financial services laws, regulations and guidance in line with those of the UK to enable Gibraltar based financial market participants to provide services into the UK and vice-versa. This will likely lead to requirements for those Gibraltar firms being required to comply with the SDR. Likewise, there are already a number of Gibraltar financial market participants preparing themselves to be, where necessary, compliant with the SFDR.

As such, Gibraltar should be well placed as a jurisdiction with exposure to both the UK and the EU, to enable firms to take advantage of the benefits of being compliant with either the SFDR (now) or the SDR (in the future) or both (in the future).


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