European Regulators Input On SFDR Review

Supervisory Authorities ("ESAs") have issued a joint opinion on the assessment of the Sustainable Finance Disclosure Regulation ("SFDR"). The publication of the own-initiative opinion follows the European Commission ("Commission") consultation on the review of the SFDR issued in September 2023. The European Securities and Markets Authority ("ESMA") followed up by issuing its own opinion on the functioning of the sustainable finance framework on 25 July 2024.

ESAs' Joint Opinion

The ESAs' opinion acknowledges that the SFDR framework could be improved and that the required disclosures may be too complex by nature and difficult to understand, in particular for retail investors, a view that is supported by consumer testing exercises. The ESAs also recognise that, despite the fact that the framework was originally designed as a disclosure and transparency regime, in practice financial market participants have been using the requirements to classify their financial