ESAs clarify sustainability reporting requirements on financial products under SFDR
The three European Supervisory Authorities (ESAs) – the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA) – have issued a joint supervisory statement clarifying key aspects of Sustainable Finance Disclosure Regulation (SFDR) disclosures.
SFDR will require investment firms to make disclosures on the sustainability of their financial products. Areas of the draft regulatory technical standards addressed in the statement include the use of sustainability indicators; principal adverse impact (PAI) disclosures; financial product disclosures; direct and indirect investments; taxonomy-related financial product disclosures; ‘do not significantly harm’ (DNSH) disclosures; and disclosures for products with investment options. The statement, say the ESAs, is part of their “on-going efforts to promote a better understanding of the disclosures required under the technical standards of the SFDR ahead of the planned application of the rules on 1 January 2023.”
ESMA has also recently published a supervisory briefing, aiming to encourage convergence across the EU when it comes to the integration of sustainability risks and disclosures in the area of asset management, as SFDR implementation approaches. “This work will help combat greenwashing by establishing common supervisory criteria for National Competent Authorities (NCAs), to effectively supervise investment funds with sustainability features,” it states.