The European Commission (EC) has proposed amendments to simplify the EU Sustainable Finance Disclosure Regulation (SFDR) – regulation adopted in 2019 which has introduced sustainability reporting requirements for financial market participants and financial advisors
After a review of the requirements, the EC body said current framework “results in disclosures that are too long and complex, making it difficult for investors to understand and compare the environmental or social characteristics of financial products”.
Under the proposal, entity-level disclosure requirements on principal adverse impacts indicators for financial market participants would be deleted. The EC said this aims to streamline corporate reporting and address overlaps between the SFDR and CSRD.
“Removing entity-level disclosures from the SFDR significantly cuts reporting requirements and costs associated with collecting data across a wide range of [ESG] and removes duplications,” the EC statement reads.
The proposal would also limit product-level disclosures to data which is available, comparable and meaningful.
The EC has also proposed simplifying the categorisation system for financial products making ESG claims – establishing a sustainable category, a transition category and an ESG basics category.
The proposal will be submitted to Parliament and Council for their deliberation.
Companies:European Commission
