The E.U. Sustainable Finance Disclosure Regulation (SFDR) represents a bold step forward in the E.U.’s push to improve transparency for investors about firms’ environmental, social and governance (ESG) practices. The SFDR represents a boon to global efforts to prevent “greenwashing” and other improper actions under the guise of ESG, but it comes at a significant regulatory and compliance cost for investment firms. As the SFDR contains multiple layers of standards depending on the nature of a firm’s ESG efforts, it is imperative for any fund manager with a nexus to the E.U. to begin preparing for when the regulations become effective. To help E.U. fund managers with that process, Travers Smith recently hosted a webinar featuring partners Tim Lewis and Michael Raymond, as well as senior consultant Simon Witney. This second article in a two-part series describes the multiple tiers of SFDR standards and the measures fund managers will need to take to comply with each of them, as appropriate. The first article provided an overview of E.U. sustainability initiatives, including an overview of the impending Taxonomy Regulation and other proposed regulatory updates. For more on ESG regulatory initiatives, see our two-part series: “OCIE’s Targeting of ESG Investing Practices in Recent Examinations and What It Means Going Forward” (Jan. 21, 2020); and “How Fund Managers Can Identify and Mitigate Risks From the SEC’s Increased Focus on ESG Investing” (Jan. 28, 2020).