Yesterday, the European Commission released its proposal to adjust the Sustainable Finance Disclosure Regulation (SFDR), which addresses several persistent challenges and represents an important step towards a more coherent, effective and user-friendly EU sustainable finance framework.
We particularly value the following improvements:
The introduction of clearer sustainable product categories underpinned by clear minimum criteria.
Simplified disclosures that refocus information on the core elements of a product’s sustainability strategy and objectives.
Prioritising product disclosures and leaving corporate-level disclosures, such as mandatory entity-level PAI reporting, out of the framework.
Stronger alignment with horizontal frameworks, including clearer integration of fund naming rules (making ESMA's Guidelines on fund names obsolete) and closer consistency with the CSRD/ESRS framework.
Removal of portfolio management and investment advice from the scope, ensuring coherence with MiFID preferences and avoiding duplicative disclosures.
Taken together, these changes address several long-standing industry requests and should improve the clarity and comparability of sustainability information for investors.
At the same time, important challenges remain. The significantly decreased scope of CSRD reporting and the absence of binding requirements for third-party ESG data providers will limit access to consistent ESG information. We therefore recommend a proportionate and transparent approach to the use of ESG data estimates when implementing the new SFDR rules. We also regret that the proposal introduces new minimum exclusion criteria that go beyond the traditional CTB/PAB approach of the ESMA fund-naming guidelines.
Looking ahead, clear guidance will be needed to ensure a smooth transition from today’s Articles 8 and 9 to the new product categories, and to align MiFID sustainability preferences with the revised SFDR framework to avoid confusion for end investors.
Tanguy van de Werve, EFAMA Director General, commented: “These changes mark an advancement toward a sustainable finance framework that is effective in practice. Establishing clearer product categories and more focused disclosure requirements will enable investors to better understand, compare, and trust the sustainability strategies of financial products. With proper implementation guidance, this proposal can greatly improve informed decision-making and accelerate Europe’s transition to sustainability.”
Anyve Arakelijan, Senior Policy Advisor at EFAMA, said: “The European Commission has proposed a regime that clarifies and streamlines the SFDR categories for end investors, without a complete overhaul. However, the new rules will still require careful reassessment of how products are classified in practice. A major ongoing challenge will be accessing comparable and reliable ESG data. If a considerable number of companies are not reporting under CSRD, asset managers will be more reliant on estimates and third-party ESG data providers for the data they need to make investment decisions and do their own reporting under SFDR.”
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Notes to Editors
Access the European Commission’s SFDR proposal here.
Read more about EFAMA’s work on SFDR here.
For further information, please contact:
Hayley McEwen
Head of communications and membership development
