EU: ESAs publish Consultation Paper proposing significant changes to the SFDR RTS

On 12 April 2023, the ESAs published a joint consultation paper seeking feedback on changes to the SFDR RTS in areas such as PAI disclosures, the SFDR DNSH test and product level disclosures. 

By way of recap, this review has been in response to a mandate the ESAs had previously received from the Commission to review the SFDR RTS and is separate from the broader review of the EU SFDR rules that was announced by the Commission in January of this year (which we think will involve a more fundamental review of the SFDR Level 1 requirements). Interestingly, the ESAs have noted that their proposals in this consultation paper go further than the mandate they had received from the Commission and their justification is that this is necessary to address the weakness / issues within the current framework.

Overall the proposed changes (if adopted) are quite significant and will require firms to potentially revisit their categorisation of Article 9/8+ products (because of changes to the DNSH test and PAI indicators), uplift existing PAI and product disclosures (due to the inclusion of additional PAI indicators and changes to the product templates) and also provide detailed disclosures of any product level GHG emissions targets. 

The deadline for feedback is 4 July 2023 and the ESAs have not indicated when they expect to publish final rules.  

Read our summary note for more on the proposed changes.