Consultations on the implementation of SFDR

On 14 September 2023, the European Commission initiated two consultations on the implementation of SFDR. The consultations focus on, among others, the regulation’s useability and role in combatting greenwashing.

The consultations are addressed to two different target groups; one is a public consultation inviting various stakeholders with a general knowledge on SFDR to contribute, whereas the other is a targeted consultation inviting stakeholders and public bodies which are subject to SFDR and/or have experience or knowledge on a more detailed basis to provide input. The consultations can be accessed here.

The public consultation includes questions on the current requirements of SFDR and the interaction with other sustainable finance legislation. The purpose is to investigate how SFDR functions in practice as well as to highlight some of the potential issues in the implementation process. The targeted consultation includes the same questions. However, it also includes questions around the potential changes to the disclosure requirements for financial market participants and questions on the potential establishment of a categorization system for financial products. This may help clarify areas within the regulation that needs improvement and how the European Commission could handle it.

ESMA (European Securities and Markets Authority) launched a consultation on the use of ESG or sustainability-related terms in fund namespreviously this year. Further, the ESAs (European Supervisory Authorities) have initiated consultations on the review of SFDR and published progress reports on the understanding of greenwashing. Even though the report and these consultations are separate from the new consultations launched by the European Commission, they focus on some of the same areas as are now being addressed in the consultations.

Next step: The consultations will be open to responses until 15 December 2023. During this period, roundtables and workshops will also take place. At the moment, however, no specific timeline has been given for the process going forward but the consultations are part of a comprehensive assessment of SFDR currently being carried out by the European Commission.

Tags:  Disclosure RequirementsRegulatory Technical StandardsSustainability