Three European Supervisory Authorities (ESAs) have published a consultation paper looking to make amendments to the Sustainable Finance Disclosure Regulation (SFDR).
The regulatory bodies including European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (Eiopa) and European Securities and Markets Authority (ESMA).
The ESAs are proposing changes to the disclosure framework to address issues that have emerged since the introduction of SFDR. The authorities seek feedback on the following amendments:
- extending the list of universal social indicators for the disclosure of the principal adverse impacts of investment decisions on the environment and society;
- refining the content of other indicators for adverse impacts and their respective definitions, applicable methodologies, formulae for calculation as well as the presentation of the share of information derived directly from investee companies, sovereigns, supranationals or real estate assets; and
- adding product disclosures regarding decarbonisation targets, including intermediate targets, the level of ambition and how the target will be achieved.
Moreover, the ESAs propose further technical revisions to the SFDR by:
- improving the disclosures on how sustainable investments “do not significantly harm” the environment and society;
- simplifying pre-contractual and periodic disclosure templates for financial products; and
- making other technical adjustments concerning, among others, the treatment of derivatives, the definition of equivalent information, and provisions for financial products with underlying investment options.
The ESAs want comments back 4 July 2023.
