The European Fund and Asset Management Association (EFAMA) has responded to a joint consultation by three European Supervisory Authorities (ESAs) — EBA, EIOPA and ESMA — that sets out regulatory technical standards (RTS) for the sustainable finance disclosure regulation (SFDR).
The central suggestions of the consultation, which ran from 12 April 2023 to 6 July 2023, are to add new sustainability indicators to principal adverse impacts (PAIs) and further disclosures to the ‘do no significant harm’ principle that applies to sustainable investments under SFDR.
EFAMA says it “fails to see the added value” in expanding disclosures regarding the “do not significant harm” principle, which mandates that investments considered sustainable not significantly harm another environmental or social objective.
Additionally, EFAMA highlights a planned review of SFDR by the European Commission, suggesting any present changes could be made obsolete soon.
Furthermore, the organisation suggested that exposing investors to disclosure rules that change frequently could erode trust in sustainable investing altogether.
The association also highlighted the lack of consistency between SFDR PAIs and the corporate sustainability reporting directive’s European sustainable reporting standards, as well as the lack of consumer testing before the ESA consultation.
In February 2023, EFAMA issued a separate response to changing ESG fund naming guidelines issued by ESMA.
Commenting on the proposed SFDR RTS, Anyve Arakelijan, regulatory policy advisor at EFAMA, says: We understand how hard it is to strike the right balance between meaningful disclosures for investors and practical implementation for the industry. We must, however, stop tinkering around the edges and address the outstanding issues within SFDR before making technical changes which may be made obsolete by the upcoming SFDR review by the European Commission.”
