SFDR review: Eurosif priorities for the trilogue negotiations
As interinstitutional negotiations ("trilogues") on the review of the Sustainable Finance Disclosure Regulation (SFDR) begin, Eurosif sets out key recommendations to make SFDR 2.0. fit-for-purpose and support responsible investment.
Why an effective SFDR 2.0 matters
A credible and usable framework can help scale up investment in the transition to a sustainable economy while strengthening transparency and preventing greenwashing risks for retail and professional investors.
Build on the progresses made while closing remaining gaps
Both the Council of the EU and the European Parliament support provisions that could significantly improve the current framework. These include the creation of three distinct product categories underpinned by clear criteria, dedicated rules for impact products, limiting the use of sustainability-related terms to categorised products and a disclaimer for non-categorised products that disclose ESG information in precontractual documentation.
However, some key issues remain that must be resolved in trilogues. Eurosif recommends that co-legislators address the following points:
- Establish strict safeguards on the professional investor opt-out to prevent greenwashing.
- Maintain robust transition category exclusions to preserve its credibility.
- Tailor SFDR criteria to different asset classes and develop criteria for social objectives.
- Establish meaningful product- and entity-level disclosures to improve transparency.
- Prevent the use of safe harbours to bypass SFDR criteria.
- Map credible international standards meeting SFDR criteria.
- Retain a “Do No Significant Harm” principle for the sustainable category.
