Interview with Nicole Lorenz: Implementing sustainable finance

Large-scale regulatory initiatives have influenced much of the legal work within the Swiss financial services space over the last couple of years. Successful legal consultants in this area employ both a specialty in the respective area of law and the ability to coordinate project management duties with multiple stakeholders working towards a common goal of successful implementation. We caught up with Nicole Lorenz, a specialist within the asset management space about her latest assignment in the implementation of sustainable finance disclosure regulations.

Dear Nicole, please introduce yourself and your qualifications:

I am a qualified Luxembourg Lawyer with over 20 years of professional experience in international corporate structuring and transactions, investment funds and more generally financial markets law.

I graduated from the University of Strasbourg in 1995, followed by an LL.M. at the University of Edinburgh in 1996.  I received my Bar admission in Luxembourg in 1998, upon which I worked over 10 years in Luxembourg as a corporate structuring and finance lawyer.

I moved to Switzerland in 2010, where I completed my qualifications with a CAS in financial markets law at the University of Zürich. Since then, I have been working as a senior legal counsel to Global Asset Management in major Swiss Banks. For some time now I have been deepening my focus in sustainable investing.

What attracted you to working with a flexible provider such as Interim Legal

I have always been attracted to the business model of a flexible working environment combined with professional legal services, however this type of business model outside the framework of law firms is a fairly new concept in Europe. Interim legal makes it possible for me to combine my legal profession with the flexibility I want in my personal life.

Please explain some of the work you have done and areas of focus during your project

The initial focus of my project was on implementation of the first wave of the new Sustainable Finance Disclosure Regulation (SFDR- Regulation EU 2019/2088), to be completed by 10th March 2021. I acted as a legal project manager for Asset Management, making sure that the various business units complied with all regulatory and legal requirements imposed by the deadline within the different European regulatory environments. To drive success, I had to be hands-on with specific technical and practical legal questions that arose along the way.

When it comes to the implementation of the SFDR what were the biggest challenges you observed in facilitating a successful implementation of the first wave of requirements?

On the one hand, the industry is faced with challenges related to the practical application of an imperfect legislation, compounded by the lack of guidelines by the EU legislator, the different national regulatory bodies and the industry associations. At the same time the various European regulators have shown a slightly different interpretation towards the regulation and requested different procedural steps. On the other hand, it was not easy to bridge the gap between the needs and requirements of the different business stakeholders and the choices imposed by SFDR to classify their existing financial products. The combination of these elements posed a number of challenging problems to solve during the first wave of the implementation.

What challenges do you foresee for financial market participants (asset management groups) in adhering to the second wave of regulatory requirements?

The next milestone, set for January 1st, 2022, is the implementation of the regulatory technical standards (RTS) with regard to the content, methodologies and presentation of sustainability related disclosures related to SFDR. Whilst the RTS is still in draft form, with many open legal questions, the next wave of RTS is already forthcoming. This wave will focus on the Taxonomy Regulation (Regulation (EU) 2020/852), amending the RTS related to SFDR. While financial market participants struggle to come to terms with the operational complexity of the next milestone, the legislation is not yet in its final form, asset management groups are left with a set of increasing challenges in the implementation of the second SFDR phase.  Flexibility and know-how will be key.