1 00:00:06,000 --> 00:00:09,320 Hi and welcome to a new episode of a Real Deals podcast. 2 00:00:09,720 --> 00:00:13,480 I'm reporter Jennifer Forrest, and on this podcast we're going 3 00:00:13,480 --> 00:00:16,920 to be focusing on the SFDR regulation, which came into 4 00:00:16,920 --> 00:00:21,040 force in March this year. Joining me, I have two guests. 5 00:00:21,360 --> 00:00:25,580 Firstly, Eve Ellis, partner at Ropes and Gray, and also Danny 6 00:00:25,580 --> 00:00:29,740 Williams, Senior Principal Consultant and ESG Advisory Team 7 00:00:29,740 --> 00:00:32,980 Member at ACA Group. I'm hoping to talk to both of 8 00:00:32,980 --> 00:00:37,100 these guests in this episode to talk about the SFDR regulation, 9 00:00:37,340 --> 00:00:40,420 how they found it over the last few months, and what they would 10 00:00:40,420 --> 00:00:44,700 like to see changed. And firstly, hi guys, welcome to 11 00:00:44,700 --> 00:00:47,940 the podcast. I was wondering if maybe if you 12 00:00:47,940 --> 00:00:51,460 could start off by talking me free what you've kind of found 13 00:00:51,460 --> 00:00:55,060 in changing of reporting. In the last few months since 14 00:00:55,060 --> 00:00:59,540 SFDR came into force. Sure and thanks. 15 00:00:59,860 --> 00:01:05,340 I mean look I think the extent to which SFDR impacts managers 16 00:01:05,340 --> 00:01:07,580 really depends on the classification of that 17 00:01:07,580 --> 00:01:11,460 particular fund product and also whether they're an EU manager or 18 00:01:11,460 --> 00:01:16,260 a non EU manager for those of our sort of manager clients who 19 00:01:16,260 --> 00:01:18,780 have products that are Article 6 products. 20 00:01:18,780 --> 00:01:22,020 So in that lowest level sort of a a conventional product? 21 00:01:22,670 --> 00:01:25,670 The reporting requirements like there aren't any sort of ongoing 22 00:01:25,870 --> 00:01:28,150 reporting requirements. So in that respect actually I 23 00:01:28,150 --> 00:01:30,750 think SFDR hasn't been a huge shift. 24 00:01:30,750 --> 00:01:34,070 There was obviously quite a lot that managers did in terms of 25 00:01:34,510 --> 00:01:37,950 the prior implementation working out what classification their 26 00:01:37,950 --> 00:01:40,790 products would have. But I think in that respect the, 27 00:01:40,910 --> 00:01:43,950 the initial reporting hasn't been too significant and for 28 00:01:43,950 --> 00:01:47,270 those managers that are able either to just apply the 29 00:01:47,270 --> 00:01:49,590 principal adverse impact. Disclosures. 30 00:01:49,590 --> 00:01:52,630 Again, the reporting has sort of not really been a huge issue for 31 00:01:53,710 --> 00:01:55,790 managers. I think it's those managers that 32 00:01:55,790 --> 00:01:59,630 are in the Article 8 or 9 or those that have decided to 33 00:01:59,630 --> 00:02:01,990 comply with the principal adverse impact disclosures where 34 00:02:01,990 --> 00:02:05,030 this is going to be something that is going to become more of 35 00:02:05,030 --> 00:02:06,710 an issue. But I think at this stage, 36 00:02:06,710 --> 00:02:10,150 because the reporting isn't effective, it probably hasn't 37 00:02:10,150 --> 00:02:12,670 been a huge change in the last few months. 38 00:02:12,790 --> 00:02:16,310 I think what the March deadline did was obviously mean that 39 00:02:16,310 --> 00:02:19,460 managers needed to focus. On the initial SFDR 40 00:02:19,460 --> 00:02:22,860 implementation and I think over the next 12 months, that's when 41 00:02:22,860 --> 00:02:25,540 we'll see more ramping up and more focus on the ongoing 42 00:02:25,540 --> 00:02:28,940 reporting requirements. For sure, Danny did. 43 00:02:28,940 --> 00:02:31,620 You have anything to add? No, I think just literally to 44 00:02:31,620 --> 00:02:34,220 mirror kind of you know what you've said, we're seeing kind 45 00:02:34,220 --> 00:02:37,180 of the same things with all kind of our client base and you know 46 00:02:37,220 --> 00:02:40,700 in the wider market where you know kind of under level one, 47 00:02:40,700 --> 00:02:42,860 there wasn't actually too too many kind of reporting 48 00:02:42,860 --> 00:02:46,300 requirements to start ramping up on for a majority of our base. 49 00:02:46,970 --> 00:02:51,010 What we also saw too I think is with SFDR it it kind of 50 00:02:51,130 --> 00:02:55,330 especially in terms of level one snuck up I think on on a lot of 51 00:02:55,330 --> 00:02:57,770 people. You know, I know there was a bit 52 00:02:57,770 --> 00:03:00,730 of a hesitation in the UK as far as managers over here waiting to 53 00:03:00,730 --> 00:03:02,010 see if it was going to be applicable. 54 00:03:02,450 --> 00:03:05,570 Obviously it was not onshore. So kind of good news in that 55 00:03:05,570 --> 00:03:09,050 respect for those firms, but we've also seen actually quite a 56 00:03:09,050 --> 00:03:11,490 few firms that because of kind of the lateness of getting 57 00:03:11,490 --> 00:03:14,650 involved in you know, seeing how it was going to comply. 58 00:03:15,280 --> 00:03:18,280 And maybe you know needing to not quite the manager level, but 59 00:03:18,280 --> 00:03:21,360 having products in scope, a lot of people seem to go into the 60 00:03:21,360 --> 00:03:24,040 direction of actually being kind of Article 6 initially. 61 00:03:24,520 --> 00:03:27,080 And and we've had quite a few conversations and heard you know 62 00:03:27,080 --> 00:03:30,720 kind of in the wider market of those firms actually looking at 63 00:03:30,720 --> 00:03:33,040 what their reporting requirements are going to be, 64 00:03:33,120 --> 00:03:35,040 should they transition to 8 or 9. 65 00:03:35,280 --> 00:03:37,000 So I think, although, you know, maybe there's. 66 00:03:37,690 --> 00:03:39,730 A little bit of kind of trial and error kind of going on in 67 00:03:39,730 --> 00:03:42,530 the background to see you know in terms of reporting 68 00:03:42,530 --> 00:03:44,890 requirements if they can meet that kind of next level 69 00:03:44,890 --> 00:03:48,610 threshold in terms of actually doing the reporting as of yet. 70 00:03:49,050 --> 00:03:50,730 Yeah. And Danny, actually I I would 71 00:03:50,730 --> 00:03:54,210 agree with that. I think, look, a lot of clients 72 00:03:54,370 --> 00:03:57,370 are within the Article 6 classification. 73 00:03:57,370 --> 00:04:00,210 But again, I think over the next year or so, you might see sort 74 00:04:00,210 --> 00:04:03,050 of clients once the reporting becomes a little clear as to 75 00:04:03,050 --> 00:04:06,010 what they've got to do. So decide whether or not 76 00:04:06,010 --> 00:04:09,650 actually. Their fund might sort of move to 77 00:04:09,650 --> 00:04:12,170 sort of Article 8 and then they'll sort of begin to comply 78 00:04:12,170 --> 00:04:14,370 with that respect, but sort of starting off with Article 6 79 00:04:14,370 --> 00:04:16,649 because they're comfortable that at this point in time they can 80 00:04:17,050 --> 00:04:19,170 they they can fit within that classification. 81 00:04:19,170 --> 00:04:22,130 So I think we're sort of seeing similar things as well. 82 00:04:22,450 --> 00:04:25,250 That's really interesting. I was wondering if, Danny, you 83 00:04:25,250 --> 00:04:29,090 could talk us free and you kind of said how interesting it was 84 00:04:29,330 --> 00:04:32,770 as to whether or not the UK would pick up SFDR with it being 85 00:04:32,770 --> 00:04:35,840 an EU regulation. I was wondering if you could 86 00:04:35,840 --> 00:04:40,160 talk us through the kind of biggest challenges from your GP 87 00:04:40,160 --> 00:04:45,080 clients perspective that have kind of arisen since the 88 00:04:45,080 --> 00:04:46,960 regulation has come into force. Yeah. 89 00:04:46,960 --> 00:04:49,480 I think one of it's been kind of twofold. 90 00:04:49,520 --> 00:04:51,640 Actually. One is a little bit, I would say 91 00:04:51,640 --> 00:04:54,920 most slightly unrelated to SFDR, but I'll start with the 1st. 92 00:04:54,920 --> 00:04:57,840 And I think the first one has been the pain point for for the 93 00:04:57,840 --> 00:05:00,720 market as a whole is that there's still a lot of kind of 94 00:05:00,720 --> 00:05:05,280 questions around the regulation. Most significantly the questions 95 00:05:05,280 --> 00:05:09,840 that were sent by as A to asthma to kind of a point on where are 96 00:05:09,840 --> 00:05:12,760 fairly significant, you know in determining whether or not kind 97 00:05:12,760 --> 00:05:16,520 of firms need to comply with SFDR or how to comply with SFDR. 98 00:05:17,160 --> 00:05:20,680 So I think still waiting on those at this point in the game 99 00:05:20,680 --> 00:05:23,600 when you know firms need to try and make decisions if they are 100 00:05:23,600 --> 00:05:27,480 going to go from 6 to an 8 and start ramping up their programs, 101 00:05:27,480 --> 00:05:31,240 you know that that is causing I think still a pain point in 102 00:05:31,240 --> 00:05:34,180 terms of. Whether or not they need to 103 00:05:34,180 --> 00:05:37,740 comply and to what extent, what's actually been a little 104 00:05:37,740 --> 00:05:41,180 bit interesting that we're seeing kind of more and more of 105 00:05:41,220 --> 00:05:46,940 is the the impact that just having SFDR exist has had our 106 00:05:46,940 --> 00:05:51,500 managers outside the scope of SFDR we're seeing an increasing 107 00:05:51,500 --> 00:05:55,540 number of. Managers actually be requested 108 00:05:55,540 --> 00:05:59,580 by either their investors or if they're a sub manager of a 109 00:05:59,580 --> 00:06:02,900 larger kind of institution, being requested to look to 110 00:06:02,900 --> 00:06:06,650 comply with SFDR. Although they may completely be 111 00:06:06,650 --> 00:06:09,650 kind of out of scope or appear to be completely out of scope 112 00:06:09,890 --> 00:06:13,210 for SFDR. So it's quite significant that 113 00:06:13,210 --> 00:06:15,610 you know, we're getting this a lot, you know, in terms of not 114 00:06:15,610 --> 00:06:19,090 just in the UK where there's a bit of a foundation in terms of 115 00:06:19,090 --> 00:06:22,290 you know, prior to Brexit we were all kind of harmonized 116 00:06:22,290 --> 00:06:25,450 under this one EU umbrella. But you know, now we're getting 117 00:06:25,450 --> 00:06:28,970 US managers, we're hearing from Oz managers, we're hearing from, 118 00:06:28,970 --> 00:06:31,650 you know, managers in Asia saying that their investors are 119 00:06:31,650 --> 00:06:34,770 telling them to have some level of compliance with SFDR. 120 00:06:34,930 --> 00:06:38,330 And actually are called 8:00 and 9:00 and that that's quite 121 00:06:38,330 --> 00:06:40,770 significant in the fact that it doesn't comply to them. 122 00:06:40,770 --> 00:06:44,370 And then how do you kind of transpose A regulatory regime 123 00:06:44,410 --> 00:06:47,850 that's applicable in one area to a manager that has absolutely no 124 00:06:47,850 --> 00:06:51,090 experience in that area? And again, there's, you know, 125 00:06:51,090 --> 00:06:54,490 there's implications of SFDR that tied to Miff in A I FM D 126 00:06:54,490 --> 00:06:57,250 and use its rules. You know, how does that kind of 127 00:06:57,570 --> 00:07:00,970 work itself out? I think that's actually quite 128 00:07:00,970 --> 00:07:04,130 significant because you know both sides don't know really 129 00:07:04,130 --> 00:07:06,930 know what to tell each other and that you know you've got 130 00:07:06,930 --> 00:07:10,290 investors and kind of European managers asking the question and 131 00:07:10,290 --> 00:07:13,850 telling you know other institutions to go do this. 132 00:07:14,130 --> 00:07:16,690 But you know there's not that kind of foundation or 133 00:07:16,690 --> 00:07:20,090 understanding or the regulatory framework to go do it. 134 00:07:20,090 --> 00:07:22,730 So I I think that is actually causing. 135 00:07:23,680 --> 00:07:26,320 A bit of a pain point that we're seeing and a bit of kind of 136 00:07:26,320 --> 00:07:29,280 confusion as to what that needs to look like. 137 00:07:30,000 --> 00:07:32,760 So I think those two we're seeing the most kind of 138 00:07:32,760 --> 00:07:35,920 questions around. I would, I mean Danny, I would 139 00:07:35,920 --> 00:07:39,120 definitely agree. I think SFDR is something, it's 140 00:07:39,120 --> 00:07:42,480 a really interesting piece of regulation because it has got so 141 00:07:42,480 --> 00:07:46,920 much focus from investors because of the subject matter, 142 00:07:46,920 --> 00:07:50,520 because the SG is such a key and central issue for investors and 143 00:07:50,520 --> 00:07:54,030 it has been for. But for many years now and we're 144 00:07:54,030 --> 00:07:57,790 we're seeing something similar where EU investors are putting 145 00:07:57,790 --> 00:08:01,390 requests on managers that are not subject themselves to SFDR 146 00:08:01,390 --> 00:08:03,510 and saying we want you to comply with SFDR. 147 00:08:03,510 --> 00:08:06,510 And I think that it'll be really interesting to see how that 148 00:08:06,630 --> 00:08:10,190 evolves over time. And also Danny, similar to your 149 00:08:10,190 --> 00:08:13,270 point that will investors actually say that we only want 150 00:08:13,270 --> 00:08:17,150 to invest in Article 8 or Article 9 products and therefore 151 00:08:17,470 --> 00:08:21,630 SFDR sort of almost becomes a marketing and brandings of? 152 00:08:22,060 --> 00:08:25,300 Tool that managers are using to be able to attract investors or 153 00:08:25,300 --> 00:08:29,060 investors won't be investing in conventional products and I 154 00:08:29,060 --> 00:08:30,980 don't think that's going to happen immediately, but it will 155 00:08:30,980 --> 00:08:33,580 be interesting to see how that develops over the next sort of 156 00:08:33,580 --> 00:08:35,500 12 to 18 months. For sure. 157 00:08:35,500 --> 00:08:39,020 I think it's definitely really interesting to see how it could 158 00:08:39,020 --> 00:08:42,860 become a marketing tool and what that kind of means for smaller 159 00:08:43,260 --> 00:08:46,260 firms as well, whether they'll suffer because the kind of 160 00:08:46,260 --> 00:08:49,460 bigger firms are using it more to their advantage. 161 00:08:51,200 --> 00:08:53,680 My next question was actually going to be on investors. 162 00:08:53,920 --> 00:08:56,160 Eve, I was wondering if you could kind of talk us through 163 00:08:56,160 --> 00:09:01,000 how you kind of not predict, but expect kind of investors to, 164 00:09:01,880 --> 00:09:06,680 yeah, let's say in the next 12 months to the outcomes of SFDR 165 00:09:06,680 --> 00:09:09,760 reporting? I mean look I think as we've 166 00:09:10,000 --> 00:09:12,080 we've probably sort of touched on that that a little bit 167 00:09:12,080 --> 00:09:16,040 already, but I do think that. Investors are looking probably 168 00:09:16,040 --> 00:09:18,880 at managers to do more nations at ESG reporting. 169 00:09:18,880 --> 00:09:21,360 But what's interesting is I think investors were putting 170 00:09:21,360 --> 00:09:24,800 those requirements on managers already prior to SFDR coming 171 00:09:24,800 --> 00:09:28,240 into play. And so that has been very much 172 00:09:28,240 --> 00:09:31,120 front and center and sort of part particularly sort of the 173 00:09:31,120 --> 00:09:34,280 larger institutional investors and particularly from a European 174 00:09:34,280 --> 00:09:36,760 perspective something that they have been requesting advantages 175 00:09:36,760 --> 00:09:38,800 for some time now. So I think that's going to 176 00:09:38,800 --> 00:09:41,360 continue and it's just going to be how much they. 177 00:09:42,030 --> 00:09:44,830 Focus their reporting requirements on what's in SFTR 178 00:09:44,830 --> 00:09:47,670 or whether they just stick to sort of other requirements that 179 00:09:47,670 --> 00:09:51,190 they may be existing subject to already. 180 00:09:51,550 --> 00:09:53,630 So I I think it will be interesting to see how things 181 00:09:53,630 --> 00:09:56,990 pan out over the next 12 to 18 months from the investors and 182 00:09:56,990 --> 00:09:59,750 what they want to see from investor reporting perspective. 183 00:10:00,230 --> 00:10:03,990 And to your point in terms of you know, data and access, I 184 00:10:03,990 --> 00:10:07,070 think that is one of the key issues with SFTR as well as how 185 00:10:07,390 --> 00:10:10,510 how the managers actually get the data to be able to do the 186 00:10:10,510 --> 00:10:12,870 reporting. It sets out, you know, in the 187 00:10:12,870 --> 00:10:15,710 draft standards in the Level 2 at the moment. 188 00:10:15,710 --> 00:10:17,870 And that again, I think it's going to be something that's 189 00:10:17,870 --> 00:10:21,390 interesting and it depends very much on asset class, like if 190 00:10:21,390 --> 00:10:24,350 you're a private equity manager taking control positions, it may 191 00:10:24,350 --> 00:10:27,590 be easier to get that data compared to if you're a credit 192 00:10:27,590 --> 00:10:30,310 fund manager. So we're also going to sort of 193 00:10:30,310 --> 00:10:33,630 see how that evolves over time and I think just sort of one of 194 00:10:33,630 --> 00:10:36,560 the points that Danny mentioned. One of the biggest issues with 195 00:10:36,560 --> 00:10:39,760 SFGR is there is still so much uncertainty and that I think is 196 00:10:39,760 --> 00:10:42,760 what people are are hugely grappling with at the moment in 197 00:10:42,760 --> 00:10:46,160 terms of both the reporting, how they classify their products 198 00:10:46,160 --> 00:10:49,320 when something becomes 6 to 8 from 8:00 to 9:00 and all those 199 00:10:49,320 --> 00:10:50,920 things I think are hopefully going to. 200 00:10:51,720 --> 00:10:54,280 You know, with future regulatory guidance and as the market 201 00:10:54,280 --> 00:10:57,640 evolves, hopefully those things will become clearer as as time 202 00:10:57,640 --> 00:10:58,800 goes on. Oh yeah. 203 00:10:58,800 --> 00:11:02,800 I think for sure, if anything, even before the regulation was 204 00:11:02,800 --> 00:11:05,200 brought out, it was quite clear that kind of confusion and 205 00:11:05,200 --> 00:11:09,920 uncertainty were quite big themes for many GPS and other 206 00:11:09,920 --> 00:11:12,680 firms kind of surrounding the SFDR regulation. 207 00:11:14,040 --> 00:11:18,080 I would then ask you both. We understand this level 2. 208 00:11:19,750 --> 00:11:23,270 Will be coming out early next year, which will build upon the 209 00:11:23,270 --> 00:11:27,710 so-called level one element of SFDR where the EU Commission 210 00:11:27,710 --> 00:11:31,750 will take on kind of feedback and learning from this year to 211 00:11:31,750 --> 00:11:35,630 make the SFDR better. I wonder if you could both kind 212 00:11:35,630 --> 00:11:40,230 of talk me through anything that you or your clients would like 213 00:11:40,230 --> 00:11:44,280 to see changed with SFDR. And if you if you could pitch 214 00:11:44,280 --> 00:11:46,640 anything to get changed, what would it be and why? 215 00:11:46,800 --> 00:11:49,480 Oh, jump in. I think actually the first 216 00:11:49,480 --> 00:11:51,280 thing, it doesn't actually have to do with Level 2. 217 00:11:51,280 --> 00:11:54,800 It's literally the clarity that of the questions that were 218 00:11:54,800 --> 00:11:58,640 already asked under level one. Again, it's very difficult for 219 00:11:58,640 --> 00:12:02,520 managers to start thinking about reporting under Level 2. 220 00:12:02,880 --> 00:12:06,880 If they don't know, they have to, you know and to what extent. 221 00:12:07,630 --> 00:12:11,510 So providing that clarity and that understanding is to even 222 00:12:11,510 --> 00:12:13,910 the difference between an Article 6 and an Article 8 223 00:12:13,910 --> 00:12:15,910 product. You know, I mean although that 224 00:12:15,910 --> 00:12:19,550 there's the investor pressure to kind of that we're seeing for a 225 00:12:19,550 --> 00:12:22,070 lot of firms to start going Article 8 or Article 9. 226 00:12:22,070 --> 00:12:24,790 As you know, we've just kind of spoke through, you know, for 227 00:12:24,790 --> 00:12:27,990 those firms that do still have that option as to whether to be, 228 00:12:27,990 --> 00:12:31,910 you know, a six or an 8, it's vital for them to kind of have 229 00:12:31,910 --> 00:12:35,150 that clarity. There's questions I know around, 230 00:12:35,150 --> 00:12:37,910 you know, whether firms that are marketing into Europe, you know, 231 00:12:37,910 --> 00:12:40,830 is it going to apply just to the product or also at the manager 232 00:12:40,830 --> 00:12:43,310 level as well. You know all of those little 233 00:12:43,310 --> 00:12:47,110 things are, you know, vital in understanding kind of more of 234 00:12:47,310 --> 00:12:50,750 what to do under level two. I think in terms of it, and 235 00:12:50,750 --> 00:12:54,070 you've touched on this already, the kind of other thing that 236 00:12:54,070 --> 00:12:57,750 kind of ties in tightly with that is the quality and the 237 00:12:57,750 --> 00:13:01,200 reporting of the data. So although you know not 238 00:13:01,200 --> 00:13:03,640 something that necessarily needs to change directly in the 239 00:13:03,640 --> 00:13:07,680 regulation, but something that you know the quality definitely 240 00:13:07,680 --> 00:13:11,600 needs to be there in order to assist firms in reporting under 241 00:13:11,600 --> 00:13:15,600 Level 2. So whether that is you know 242 00:13:15,640 --> 00:13:18,120 either and we're seeing a bit of a ramp up with data providers, 243 00:13:18,120 --> 00:13:20,680 you know at least you know saying that that they're getting 244 00:13:20,680 --> 00:13:23,840 more and more kind of availability of data and able to 245 00:13:23,880 --> 00:13:26,440 report kind of more under principal adverse impacts and 246 00:13:26,560 --> 00:13:30,010 other criteria. Whether or not it's going to be 247 00:13:30,010 --> 00:13:33,690 there come Gen. one again it's going to be kind of a 248 00:13:34,210 --> 00:13:37,050 interesting to see I guess there's to speak and then what 249 00:13:37,050 --> 00:13:40,050 happens if it doesn't. You know this is going to impact 250 00:13:40,050 --> 00:13:42,730 everyone across the board. If the data is not available for 251 00:13:42,730 --> 00:13:46,210 you know one of them across these platform then it probably 252 00:13:46,210 --> 00:13:49,570 is not available for others out there and then you know what's 253 00:13:49,570 --> 00:13:52,690 the end result. So I think maybe potentially a 254 00:13:52,690 --> 00:13:55,980 little bit of leeway. In terms of from a regulatory 255 00:13:55,980 --> 00:14:00,380 standpoint, I don't think we'll actually the cynic and me saying 256 00:14:00,460 --> 00:14:03,740 we won't, we won't get a pushback kind of any further you 257 00:14:03,740 --> 00:14:07,100 know for Level 2 and reporting. But you know these are things 258 00:14:07,100 --> 00:14:11,020 that that are going to come up, you know that we can kind of 259 00:14:11,420 --> 00:14:14,500 foresee potentially occurring. So I'd say that those those two 260 00:14:14,500 --> 00:14:16,980 are are kind of the key key pain points. 261 00:14:18,580 --> 00:14:20,980 Yeah, I mean, I would, I would agree like having more clarity 262 00:14:20,980 --> 00:14:23,370 across the board. I think will be really helpful 263 00:14:23,370 --> 00:14:27,530 for managers. I think in terms of the 264 00:14:27,770 --> 00:14:32,330 reporting, I completely agree having more leeway and 265 00:14:32,330 --> 00:14:35,490 discretion for managers to decide how they report. 266 00:14:35,490 --> 00:14:38,170 I think it's really important because unfortunately the 267 00:14:38,170 --> 00:14:41,130 regulation can never be designed with all the different fund 268 00:14:41,130 --> 00:14:43,730 types and all the different strategies in mind. 269 00:14:43,730 --> 00:14:47,330 So giving invest, giving managers the discretion and 270 00:14:47,330 --> 00:14:50,850 ultimately a lot of this, particularly in the 271 00:14:50,850 --> 00:14:53,880 alternatives. Space has sort of already been 272 00:14:53,880 --> 00:14:57,120 dealt with over the years as between investors and managers 273 00:14:57,120 --> 00:14:59,440 because they negotiate their fund documentation. 274 00:14:59,680 --> 00:15:02,480 Investors are sophisticated. They they have sort of the 275 00:15:02,480 --> 00:15:05,560 requirements for example around ESG and those have been sort of 276 00:15:05,560 --> 00:15:08,400 negotiated with investors having this overlay of sort of 277 00:15:08,400 --> 00:15:12,240 prescriptive requirements that may not work for a particular 278 00:15:12,240 --> 00:15:14,460 fund or a strategy. I think becomes really 279 00:15:14,460 --> 00:15:17,380 challenging and probably adds more sort of administrative 280 00:15:17,380 --> 00:15:20,860 burden necessarily having the right impact from an ESG 281 00:15:20,860 --> 00:15:23,980 perspective. I mean SFTR certainly has been 282 00:15:23,980 --> 00:15:27,900 helpful in terms of sort of creating a a baseline where all 283 00:15:27,900 --> 00:15:30,820 managers now need to at least integrate and consider ESG. 284 00:15:30,820 --> 00:15:33,900 But I think we've got to be careful that actually you with 285 00:15:33,900 --> 00:15:36,780 the reporting being so prescriptive and difficult to 286 00:15:36,780 --> 00:15:39,020 apply across potentially different aspect classes and 287 00:15:39,020 --> 00:15:41,420 having the data actually available, I think it's going to 288 00:15:41,420 --> 00:15:45,340 make it very challenging. For for people to manage in 289 00:15:45,340 --> 00:15:48,460 practice. The other area I think that is 290 00:15:48,460 --> 00:15:51,420 challenging for managers is the interaction between SFGR and the 291 00:15:51,420 --> 00:15:53,740 taxonomy regulation. And I think at the moment that 292 00:15:53,740 --> 00:15:56,820 is really unclear. And again that's something I 293 00:15:56,820 --> 00:15:59,340 think is going to evolve. But I think that those managers 294 00:15:59,340 --> 00:16:03,860 that are in that space where that product overlays both that 295 00:16:03,860 --> 00:16:05,940 is even more challenging. And at the moment, when you look 296 00:16:05,940 --> 00:16:08,340 at the different sort of drafts that are out there, it's just 297 00:16:08,380 --> 00:16:11,100 it's very difficult to sort of work out what applies. 298 00:16:11,490 --> 00:16:13,650 And how it works in practice. So that's an error. 299 00:16:13,650 --> 00:16:15,930 I think there does need to be significant more priority as 300 00:16:16,010 --> 00:16:19,370 well. That's really interesting. 301 00:16:19,370 --> 00:16:21,850 Everything that you both said. I think it'll be really 302 00:16:21,850 --> 00:16:24,730 interesting to kind of see if that changes. 303 00:16:24,810 --> 00:16:29,730 And yeah, and and how, how it would and the kind of usefulness 304 00:16:29,730 --> 00:16:32,650 that that would bring. I think that's a really nice 305 00:16:33,050 --> 00:16:37,170 note to finish on. Thank you both for joining me on 306 00:16:37,170 --> 00:16:39,010 this podcast and talking me through. 307 00:16:39,620 --> 00:16:42,940 Kind of SFDR and how it is now. It's been really interesting to 308 00:16:42,940 --> 00:16:43,580 discuss it.