The ESA s have announced the publishing of a joint Opinion of the assessment of the Sustainable Finance Disclosure Regulation and a proposition for improvements. Following this announcement, the three European Supervisory Authorities (EBA, EIOPA, and ESMA – ESAs) published a joint Opinion on the assessment of the Sustainable Finance Disclosure Regulation (SFDR).

The ESAs also called for a coherent sustainable finance framework that caters to both the green transition, as well as optimised customer protection, taking into account the lessons that were learned from the functioning of the SFDR. In addition, the enterprises will continue to focus on meeting the needs, preferences, and demands of customers and clients in an ever-evolving market, while also prioritising the process of remaining compliant with the regulatory requirements and laws of the industry. More information on the announcement Throughout this launch, the ESAs will focus on methods and ways to introduce simple, secure, and clear categories for financial products.

The overall simplification consists of two voluntary product categories, `sustainable` and `transition`, that financial market participants and individuals should leverage in order to ensure customers understand the purpose of the services. The rules for the cateries should also have a clear objective and criteria to reduce greenwashing risks. In addition, the ESAs recommend that the European Commission should consider the introduction of a sustainability indicator that is expected to grade financial tools such as life insurance, pension products, and investment funds.

The Opinion also covers insights in multiple areas, such as appropriate disclosures for products outside the two categories in order to reduce greenwashing, improvements to the definition of sustainable investments, as well as other technical suggestions, including which products should be under the scope of SFDR and how to optimise disclosures regarding the negative impact of investments on individuals and the environment alike. At the same time, it also focuses on the simplification of the way disclosures are presented to investors, and the overall need for client testing before putting forward any policy proposals to review the SFDR, such as the process of introducing a categorisation system and/or an indicator. Furthermore, the Opinion was published in the context of a comprehensive and detailed review of the SFDR framework by the European Commission, which includes the Delegated Regulation and the SFDR regulation.

At the same time, the ESAs are expected to be ready to support the European Commission in future policy considerations, on any review of the SFDR framework. .