The European Commission (EC) has launched two consultations on the implementation of the Sustainable Finance Disclosure Regulation (SFDR), to ensure that the rules remain fit for purpose.

The EC launched both a public consultation and a targeted consultation, which is specifically seeking views from public bodies and stakeholders who are more familiar with the SFDR and the EU’s sustainable finance framework as a whole.

The SFDR, which came into force in March 2021, sets out how financial intermediaries, such as asset managers, have to communicate sustainability information to investors.

It is designed to bring more transparency to the market and enable investors to make informed choices.

EC commissioner for financial services, financial stability and capital markets union, Mairead McGuinness, previously announced plans for a comprehensive assessment of the framework to assess potential shortcomings in December 2022.

In particular, this is expected to focus on legal certainty, the useability of the regulation and its ability to play its part in tackling greenwashing.

The open and targeted public consultations are therefore expected to make up an important part of this assessment, complemented by workshops and roundtables, enabling stakeholders to submit further input.

The consultation will run until 15 December.

Commenting on the consultation, McGuinness stated: “Sustainability information is key to empowering investors to make informed decisions on their investments.

"Since the SFDR was proposed in 2018, a lot has changed in the world of sustainable finance.

"Today we are launching an in-depth three-month consultation for stakeholders. We want to know if our rules meet their needs and expectations, and if it is fit for purpose.”

The news was welcomed by the UK Sustainable Investment and Finance Association (UKSIF), as chief executive, James Alexander, highlighted the consultation as an "important and necessary step" in reviewing the considerable implementation challenges of the SFDR framework.

“Improvements to the SFDR should draw on the UK’s SDR regime and other jurisdictions’ fund labelling approaches," he continued.

"It is very encouraging to see some of the Commission’s new proposals closely mirror the forthcoming UK SDR regime, which we are confident will enhance transparency for savers and their trust in sustainable investment products.

“We continue to see a key role for the UK in establishing a world-leading regime that builds on other jurisdictions’ frameworks, and the potential, even more now, for the UK to help positively shape other countries’ approaches and encourage international alignment of disclosures and fund labelling in the coming years.”

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