News 14/12/23

AFM welcomes targeted consultation by European Commission on implementation of the SFDR

The Dutch Authority for the Financial Markets (AFM) welcomes the targeted consultation launched by the European Commission aimed at exploring potential improvements to the SFDR. The AFM is in favour of creating consumer-friendly sustainability product classifications. This is set out in the AFM’s response to the targeted consultation launched by the European Commission: ‘On the implementation of the Sustainable Finance Disclosure Regulation (SFDR)’.

In short

European Commission seeks input on future revisions to the SFDR
European Commission proposes introduction of sustainability product classifications
AFM supports proposal, but with some modifications
AFM has set out proposal for consumer-friendly product classifications in a position paper

European Commission seeks input on potential revisions to the SFDR

The targeted consultation focuses on the current SFDR rules and potential changes to improve them. The European Commission wants to know whether the SFDR contributes to increased transparency regarding sustainability and whether this information is also useful for investors. The Commission also asks whether the SFDR helps to channel capital towards investments considered sustainable and addresses greenwashing.

European Commission proposes introduction of sustainability product classifications

One of the proposals in the consultation is the establishment of sustainable financial product classifications. In practice, the distinction between products that meet the requirements under Article 8 or 9 of the SFDR leads to this being used as a sustainability labelling tool, contrary to the intention of the SFDR. The European Commission is therefore asking whether it would be advisable to replace these articles with several sustainability product classifications with clear minimum criteria.

AFM supports proposal, but with some modifications

We believe it is important that current legislation is better tailored to investors' perceptions and experiences and makes it easier for them to make sustainable impact investment decision. This can be achieved, amongst other things, by introducing a number of product classifications that are aligned with the expectations and objectives of sustainable investors. In addition, the AFM is in favour of minimum disclosure requirements on sustainability aspects for all financial products with or without sustainable features.

We recently published a position paper in which we put forward a number of proposals for improving the SFDR. This position paper forms the basis for our response to the consultation.