What is the Sustainable Finance Disclosure Regulation (SFDR)?
The Sustainable Finance Disclosure Regulation (SFDR) requires financial market participants and financial advisers within the EU to disclose how they integrate sustainability risks into their investment decisions and the impact of their investments on sustainability factors.
The SFDR was introduced by the European Commission as part of a legislative package supporting the European Green Deal, to promote a sustainable economy and encourage the financial sector to focus more on sustainable activities to reduce the negative impact of fossil fuels and carbon emissions. The SFDR entered into force in March 2021, and national regulators across the EU are now responsible for enforcing the regulation. verordening.
Who does the SFDR apply to?
The SFDR affects a wide range of financial market participants, such as asset managers, investment funds, pension funds, insurance companies, banks and credit institutions. Based on these new requirements, fund managers, financial advisers and other financial institutions must collect ESG data and disclose all sustainability risks related to their investments and financial products – on websites, in prospectuses and periodic reports.
Why is it important?
The SFDR aims to bring a level playing field for financial market participants and financial advisers on transparency in relation to sustainable risks, the consideration of adverse sustainability impacts in their investment processes and the provision of sustainability-related information with respect to financial products.