Sustainable Funds Take 2: The European Commission Revisits The SFDR

The European Commission's ("Commission") has published a proposal to amend the Sustainable Finance Disclosure Regulation ("SFDR") including the introduction of new product categorisation regime to replace the disclosures-based framework introduced under the SFDR in March 2021. The review has been shaped by the EU's overarching simplification agenda and the underlying intention is to simplify the requirements while ensuring the investors can access comprehensible information on the sustainability of their investments.

Background to the Review

The Commission initiated a review of the SFDR in late 2022, with a consultation running from September to December 2023. The Commission has found that, while the objectives of the SFDR remain broadly supported, several aspects of the rules are considered complex and difficult to implement. There have been issues related to the misalignment between the concepts and definitions in the SFDR and other EU sustainable finance