On 14 December, ESBG submitted its feedback on the Sustainable Finance Disclosure Regulation (SFDR) review, emphasizing the need for updates to enhance framework consistency and clarity. While supporting SFDR’s transparency goals, ESBG notes disproportionate costs compared to benefits, impacting resource allocation and causing challenges for financial market participants. The organization urges careful consideration of future changes to avoid complexity, implementation difficulties, and customer fatigue.

ESBG highlights retail clients’ struggle to comprehend diverse sustainability definitions across EU initiatives, leading to inconsistencies, double reporting, legal uncertainties, and accusations of greenwashing. The organization recommends reducing mandatory PAI indicators, focusing on generally relevant ones to minimize investor misinterpretations.
Simplifying entity disclosure requirements is deemed necessary to address the complexity of information available in the market, particularly for retail customers. ESBG acknowledges the challenge of obtaining reliable data outside the EU and methodological issues related to PAI indicators for the principle of no significant harm to the environment.

ESBG supports a categorization system for financial products but emphasizes careful design to ensure investor understanding, market integrity, and alignment with other regulations, notably MiFID II. Lastly, ESBG stresses that the SFDR should better reflect the notion of transition, as the current binary approach to sustainable vs. non-sustainable investments lacks nuance