Summary report of the consultations on the implementation of SFDR
Published 21 May 2024
Category: Impact and ESG
The European Commission initiated in September 2023 public and targeted consultations on the implementation of the SFDR running until 22 December 2023. A summary of the contributions on the consultations have now been published in a summary report.
An overview of the two different consultations, their target groups and main questions have previously been outlined in our Pulse update. Overall, the consultations are part of a comprehensive assessment of SFDR currently being carried out by the European Commission.
Based on the stakeholder contributions, the following main conclusions can be drawn:
- There is a great support for transparency through sustainability-related disclosures and SFDR in general as well as the idea of a disclosure framework on EU level. However, the respondents believe that the framework has some limitations such as lack of data availability which have slowed down its effectiveness.
- There is a need for improvement of the interaction between the various sustainable finance frameworks as there is currently a lack of coherence.
- There is no actual consensus in regard to the relevance of the SFDR entity-level disclosures but many of the respondents underlined the need for streamlining and simplifying the entity-level disclosure requirements throughout the sustainable finance framework by, among others, focusing more on material issues.
- There is support for having more standardised disclosure requirements for all financial products to secure a fair competition. Further, products making sustainability claims should be subject to additional disclosures.
- There is great support for sustainability product categories in order to have an efficient distribution system. Further, a vast majority of the respondents do not find that the disclosures in themselves are enough.
- There is no actual consensus on the question on the establishment of a categorization system for financial products. In general, the respondents are divided between the two proposed approaches; first approach being to divide categories and redefine them with new criteria for article 8 and 9, and second approach being to convert article 8 and 9 into formal product categories by supporting the existing concepts. However, the following overall points can be drawn:
- The categories and disclosures shall be comparable and easy to understand for retail investors.
- The approach in EU shall to a greater extent be international applicable.
- There is great support for establishing a specific category for products having a transition focus.
- The underlying criteria shall be asset-neutral and useful to all financial products.
The summary report can be accessed here.
Tags: Disclosure RequirementsRegulatory Technical StandardsSustainability
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