Under way to a better implementation of transparency regulations for sustainability
As of 1 January 2023, more specific regulation will be put in place regarding sustainability disclosure in the financial sector. In anticipation the AFM looked at the implementation of the SFDR requirements that have already been in effect. The sector has taken steps to comply with these regulations. However, the AFM sees room for improvement, and urges the sector to speed up efforts to further improve. Sustainability information can be made more understandable and concrete across the board. The AFM will keep monitoring this.
In short
• Sustainability information can be made more understandable and concrete across the board
• 93% of participants has a pension scheme that promotes sustainable characteristics
• Managers of investment funds have become more cautious when classifying a fund as sustainable
• The sector must prepare for more specific rules about sustainability disclosures
• Transparency laws for sustainable finance should prevent greenwashing.
Sustainability information can be made more understandable and concrete across the board
The AFM conducted three reviews into the application of the SFDR at banks, insurers, pension providers, investment firms, and asset managers. The results show sustainability information is provided, but it could be more understandable and concrete across the board. Smaller parties have more difficulty with complying to the new regulations compared to larger parties. Organizations are often unable to disclose whether their investments are in line with the Taxonomy: this is the European definition what qualifies as green.
93% of participants has a pension scheme that promotes sustainable characteristics
The largest share of pension participants has a pension scheme that promotes sustainable characteristics. Not a single pension fund offers a scheme that has positive impact as the primary objective.
Administrators of investment funds have become more cautious when classifying a fund as sustainable
The AFM sees that managers of investment funds have made improvements in their sustainability disclosures compared with the 2021 SFDR review. This is partly confirmed in this current review, in which multiple administrators have changed the classifications of their funds to a less sustainable level. It has become clearer how the classification should be applied.
The sector must prepare for more specific rules about sustainability disclosures
The current level of information disclosure does not meet the current requirements. The additional regulation that will come into effect as of 1 January 2023, is expected to give more clarity. The sector must prepare for this. It is important that the sector takes steps to improve and informs consumers well. The insights from the three reviews can help the sector achieve this.
Transparency laws for sustainable finance should prevent greenwashing.
The Sustainable Finance Disclosure Regulation (SFDR) that has been into effect since 10 March 2021, aims to give consumers insight into how ‘green’ products and the financial organizations are. This allows them to choose products and organizations that fit their expectations. The SFDR also requires clarity about the impact of sustainability risks, such as floodings or carbon prices, on the return on investments. The EU taxonomy has (partly) come into effect on 1 January 2022.
More information
AFM report SFDR banks, investment firms an insurers (pdf, 323 kb)AFM report SFDR Fund Management (pdf, 267 kb)
Key points AFM report pension funds and premium pension institutions (pdf, 153 kb)
AFM report SFDR banks, investment firms an insurers (pdf, 323 kb)
AFM report SFDR Fund Management (pdf, 267 kb)
Key points AFM report pension funds and premium pension institutions (pdf, 153 kb)
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