Expert Opinion | SFDR: Navigating the Uncertainty

What are the solutions to the SFDR regulation’s inconclusive results, and what are the prospects for a revamp?

Faced with the backlog of financing needed to meet European sustainability targets, as highlighted by the European Central Bank in May 2023, the European Commission has launched a consultation on the revision of the Sustainable Finance Disclosure Regulation (SFDR).

•  Despite the numerous clarifications issued by regulators, the regulatory concepts
  remain unclear and their interpretation by financial actors is still too disparate;
• Reporting obligations have only partially increased the transparency and comparability
  of investment strategies, in particular because of their lack of readability and the
  limitations encountered in collecting the underlying data;
• The upcoming revision of the regulation could be an opportunity to further clarify the
  terms used, facilitate the articulation between regulations and streamline reporting
  obligations;
• Beyond transparency obligations, the mainstreaming of appropriate sustainability
  indicators and the development of frameworks for robust transition plans are essential;
• Finally, emphasis should be placed on reviewing asset valuation models to ensure that
  sustainability risks are considered more consistently.

In this expert opinion, I Care offers an insight into the causes of this analysis on SFDR, and suggests ways forward for regulators and financial players alike.

This expert opinion, written in February 2024 by Clara Bécard, Nicolas Forget, Sami Kallal, Amine Maaninou, is part of a cycle of publications and expert opinions offered by I Care, which you can find in the “Expert Opinions” section.

Discover the Expert Opinion “SFDR: Navigating the Uncertainty”