The three European Supervisory Authorities (ESA) have published a consultation on amendments to the delegated regulation of the Sustainable Finance Disclosure Regulation (SFDR).

The European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA) and European Securities and Markets Authority (ESMA) have proposed changes to the disclosure framework to try and address issues that have arisen since SFDR’s introduction.

They are seeking feedback on amendments that aim to extend the list of universal social indicators for the disclosure of the principal adverse effects of investments on the environment and society.

Furthermore, the ESAs have proposed refining the content of other indicators for adverse impacts and their definitions, methodologies, calculation formulae and the presentation of the share of information derived from investee companies, sovereigns, supranationals or real estate assets.

The proposals also include adding product disclosures on decarbonisation targets, including intermediate targets, the level of ambition and how the target can be met.

Alongside these proposals, the ESAs are seeking feedback on further technical revisions to the SFDR delegated regulation by improving the disclosures on how sustainable investments no not “significantly harm” the environment and society.

They have also proposed simplifying pre-contractual and periodic disclosure templates for financial products and making other technical adjustments, including on the treatment of derivatives, the definition of equivalent information, and provisions for financial products with underlying investment options.

The consultation is open until 4 July 2023, and the ESAs will organise a joint public hearing and consumer testing during the consultation period.

Once all the feedback has been considered, the ESAs will produce a final report and submit it to the European Commission.

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