EFAMA publishes recommendations for the SFDR review
The European Commission has been reviewing the Sustainable Finance Disclosure Regulation (SFDR) since 2023, with the latest Call for Evidence ending last Friday and a proposal expected from them in Q3 this year. We see this as a pivotal opportunity to create a more usable, investor-focused, and coherent framework, without fully undoing the progress and infrastructure the industry has already built.
Given the close interlinkages between SFDR, the EU Taxonomy, and the Corporate Sustainability Reporting Directive (CSRD), coherence across the regulatory landscape is essential.
SFDR product categories must be intuitive for investors and fully compatible with MiFID/IDD sustainability preference requirements.
SFDR disclosures must be based on company-reported data under CSRD. If CSRD reporting is reduced, as foreseen in the Omnibus I proposal, SFDR product categorisation must reflect actual data availability.
The categories proposed by the Platform for Sustainable Finance served as a starting point for our discussions. Our response builds on this to put forward a more balanced and workable framework.
Sustainable category: For products offering targeted and measurable solutions to sustainability matters that affect people and/or the planet. This should build on the current SFDR Article 2(17), without relying solely on the Taxonomy framework.
Transition category: For products investing in companies/assets undergoing transition or solutions that foster wider economic transition. Measurability of outcomes/interim progress should be ensured through binding sustainability indicators as stipulated in the product terms.
ESG Collection category: A broader category for process-based products with clearly articulated sustainability features, allowing most current Article 8 SFDR funds to migrate into the new system.
Disclosure obligations must remain simple, focused and proportionate if we want a user-friendly and competitive EU sustainable finance regime.
For all financial products, SFDR Article 6 already provides a baseline level of transparency, no additional mandatory disclosures should be introduced.
For ESG or sustainability-related products, disclosures should focus on sustainable investment objectives or characteristics, binding elements of the investment strategy — including any minimum commitments, and key performance indicators to measure sustainability outcomes.
Regardless of the outcomes with SFDR or CSRD, entity-level reporting should also be streamlined to avoid duplication. Any future requirements must be well-suited to the asset management sector and incorporate materiality assessments.
A full overhaul of the SFDR is unnecessary. A targeted refinement of the existing framework, building on established concepts and resolving known inconsistencies, would maintain regulatory stability and minimise disruption or excessive compliance costs.
Last but not least, to avoid unintended consequences, any changes must be informed by market impact assessments and consumer testing. Reforms should be built on evidence of what improves investor understanding, product innovation, and market clarity.
Anyve Arakelijan, Senior Policy Advisor at EFAMA, commented: “The Savings and Investment Union strategy has put simplification and the needs of investors front and centre. We hope this ethos also guides the SFDR review by ensuring disclosures are simple and pragmatic, and categories are useful for end-investors. The timing is perfect for a smarter SFDR that puts the investor first, aligns with corporate reporting, and avoids unnecessary complexity. This will ensure the EU sustainable finance regulatory framework remains both credible and competitive.”
- ENDS -
Notes to Editors
Read our full SFDR policy paper here.
Access the European Commission Call for Evidence here.
For further information, please contact:
Hayley McEwen
Head of communications and member development
