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(BRUSSELS) – New rules on sustainable finance disclosure, aimed at strengthening and improving how sustainability related information is disclosed in the financial sector, came into force in the EU on Wednesday.
The Sustainable Finance Disclosure Regulation (SFDR), seen as a cornerstone of the EÚ Commission’s Action Plan on Sustainable Finance, aims to trigger changes in behavioural patterns in the financial sector, discouraging greenwashing, and promoting responsible and sustainable investments.
The SFDR will set common EU rules on: i) how financial product manufacturers and financial advisers should inform end-investors about sustainability risks, ii) how the impact of investments on the environment and society should be disclosed, and iii) how financial products that are marketed as sustainability-related actually meet that ambition.
This enhanced transparency will increase awareness of the sustainability credentials of financial products.
While there is growing recognition of the importance of sustainability and awareness of climate-related risks and opportunities, the type of information provided to investors in the financial sector has been limited up until now, and requirements have often differed across Member States.
First proposed by the Commission in May 2018, these new rules will strengthen and improve how sustainability related information is disclosed in the financial sector.
These rules are part of the EU’s efforts under the Sustainable Development Agenda and Carbon Neutrality Agenda, as well as its commitment to the Paris agreement, to ensure that the financial sector throws its full weight behind the fight against climate change.
The Regulation will be accompanied by Regulatory Technical Standards (RTS), which are being jointly developed by the European Supervisory Authorities, and which will be applicable at a later stage.
Sustainable Finance Disclosure Regulation (SFDR)
