Consultation on the ESAs review of SFDR

Published 1 May 2023

PrintCategory: Impact and ESG

The European Supervisory Authorities (EBA, EIOPA and ESMA) have earlier this month published a consultation paper in which they propose amendments to the Commission Delegated Regulation (EU) 2022/1288.

The consultation paper comes on the basis of a mandate from the European Commission to review the Commission Delegated Regulation (EU) 2022/1288 and the Regulatory Technical Standards (RTS). The purpose is to address some of those technical issues which have become visible since the adoption of the SFDR as well as reflecting the increasing demand for sustainability-related information of high quality.

The consultation paper includes proposals for various material changes to the disclosure requirements entered into force on 1 January 2023. The following proposals have been put forward:

  • The list of social PAI indicators shall be extended to include, among others, indicators such as the share of employees earning less than the adequate wage and the exposure to companies involved in the cultivation and production of tobacco. This shall ensure more balance between environmental and social PAI indicators.
  • The existing PAI indicators shall be amended and refined by ensuring more formalistic definitions, updated calculation methodologies as well as technical clarifications etc.
  • New disclosures in the pre-contractual, website and periodic disclosures for Article 8 and 9 products with decarbonization targets shall be developed. This shall put greater focus on setting and achieving targets as well as the level of ambition.

Further, the ESAs have put forward the following proposals, which however, were not explicitly included in the mandate from the EU Commission:

  • Various enhancements to the do no significant harm (DNSH) disclosures such as more detailed information on quantitative thresholds. Further, they have addressed a need to consider changes to the DNSH structure in the SFDR level 1 regulation.
  • Disclosure templates shall be simplified by, among others, including a dashboard at top of the templates which summarizes central information.
  • Other technical adjustments.

Next steps: The consultation will be open to responses until 4 July 2023. The ESAs will furthermore organize a joint public hearing and conduct targeted testing during this period. Based on the responses, the ESAs will prepare a Final Report to be submitted for the European Commission by October 2023. At the moment, no information has been given on a specific timeline for the evaluation and potential adoption of the draft amendments to the RTS.

Tags:  Disclosure RequirementsESMARegulatory Technical StandardsSustainability


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