The Franco-German position of the IFD and SFB on the revision of the SFDR regulation
The Institut de la Finance Durable (IFD) and the Sustainable Finance Advisory Committee of the German Federal Government (SFB), as part of a partnership established in October 2023, publish their first joint position paper.
In general, the IFD and SFB welcome the European Commission’s proposal to revise the SFDR – Level 1, while considering that it should be part of a broader review of the architecture and content of regulatory texts relating to sustainable finance. Within this framework, the priority should be to ensure greater coherence between texts, improved transparency of data emanating from the economic and financial sectors, and access for financial players and savers to more robust instruments for aligning their financing decisions with their sustainability preferences.
As a cornerstone of the European policy framework for sustainable finance, the SFDR should facilitate the necessary transparency in the publication of sustainability-related information by financial players, in coherence with other European regulatory frameworks, and without generating new reporting requirements.
The IFD and SFB stress the need in particular to align the SFDR with the reporting requirements of the CSRD, so that, for example, ‘PAI’ indicators are aligned with ESRS requirements in order to avoid the obligation to publish data that would not be requested upstream from companies. The IFD and SFB maintain that the SFDR is the relevant framework for comparing financial products and entities on their sustainability characteristics. However, the margins of interpretation relating to SFDR concepts and disclosure requirements are currently considered too wide to enable financial market participants to implement the regulations with confidence. In this context, it is important to emphasize the need for clearer and more consistent definitions and explanations within the regulations. For example, while the concept of ‘sustainable investment’ needs to be clarified, it is also essential to explicitly integrate the concept of ‘transition’ as a core element of investment strategies through clear definitions and objectives.
IFD and SFB are committed to supporting legislative and regulatory initiatives aimed at ensuring greater transparency and achieving the objectives of the European Green Pact. In this respect, they will continue to collaborate on the development of effective regulations, and remain open to constructive dialogue with legislators, supervisory authorities, market participants and other stakeholders.
Yves Perrier, Chairman of IFD: ‘SFDR regulation must be a pivotal tool for directing financial flows towards the ecological transition. By promoting transparency and accountability, it should enable financial institutions to support sustainable activities. On the other hand, it is essential to revise this regulation during the next European mandate to make it more operational, following the recommendations made jointly by the IFD and the SFB.’