EU: European Commission launch Call for Evidence to simplify SFDR

The European Commission has published a Call for Evidence today to help form an impact assessment on a revision of the Sustainable Finance Disclosure Regulation (SFDR).  In particular, the assessment aims to:

• simplify key concepts; 
   
• streamline and reduce disclosure requirements focusing on the most essential information for investors; and 
   
• explore the case for categorising financial products that make sustainability-related claims. 

The Call for Evidence is very high level and so not much can be gleaned from it at this stage, but the paper does state that the “The review will therefore aim to adapt the framework to the potential changes to corporate reporting obligations under the Corporate Sustainability Reporting Directive and EU Taxonomy rules, also taking into account voluntary reporting standards for smaller companies.” and notes that potential options for the revisions of SFDR include (i) targeted changes and clarifications for existing disclosure requirements; or (ii) more far reaching changes to the regime overall, to move towards a formal labelling regime akin to what we have in the UK and what the PSF had recommended. We have been assuming that the direction of travel would be option (ii), that is a fundamental overhaul of the regime, but the Call for Evidence is interesting, as it suggests that the Commission is open to making targeted amends to SFDR instead. 

The paper also notes that “the options should interact coherently with EU rules for the distribution of financial products to investors”, which indicates that there may be potential changes in the MiFID II/IDD ESG rules related to distribution also (namely the product governance and sustainability preferences related ESG rules). 

In terms of timing, the Call for Evidence closes on 30 May 2025 with a view to incorporating the feedback into the Commissions SFDR revision work plan which is currently targeted for Q4 2025.