Sustainable Finance Disclosure Regulation (SFDR)
Sustainable Finance Disclosure Regulation (SFDR) introduces new sustainability-related disclosure obligations in the financial services sector. SFDR rules set disclosure obligations for manufacturers of financial products as well as for financial advisers. The goal is to encourage sustainable investments and to prevent greenwashing strategies in the finance sector. Disclosing obligations will also provide information on whether negative externalities on the environment or social impacts are considered in the financial product and advice. The regulation will make it harder for market participants to use environmental and social credentials for financial products without following through with action.
It aims to: drive €1 trillion into green investments over the next ten years, clarify climate-related information disclosure obligations for financial market stakeholders (i.e. whether the impact of the investment decision plays positively or adversely on climate, environment and social justice), give firms with genuinely sustainable products an edge. Regulatory technical standards (RTS) drafts were presented to the EU Commission in February 2021 and should apply from 1 January 2022.
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