Unsustainable risks? Regulatory climate change for AIFMD

The Alternative Investment Fund Management Directive (“AIFMD”) was implemented in the EU in 2013, to regulate the alternative investment industry, chiefly as a result of the Global Financial Crisis. Fast forward seven years, and this directive is still evolving, but now with a new focus: sustainability.

On 8th June 2020, the European Commission published a draft delegated act1 which, if implemented, will increase the importance of sustainability in the AIFMD. The change comes from the wider EU Action Plan on Financing Sustainable Growth, which stems more broadly from the United Nations Sustainable Development Goals. It has the objectives of reorienting capital flows towards a more sustainable economy, making sustainability a core component of mainstream risk management and fostering transparency and long-termism2. The draft changes are expected to come into effect by the end of Q3 or the beginning of Q4, 2021. However, there are a number of factors that could disrupt this timeline, such as, of course, the impact of the COVID-19 pandemic.

MJ Hudson works with clients in the fields of law, international administration, fund management, investment advisory, and IR and marketing, across both alternative and traditional asset classes.Gresham House Strategic PLC (LON:GHS) has a 1.3% ownership of MJ Hudson as of June 2018.

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