With the Sustainable Finance Disclosure Regulation (SFDR) and its gradual enforcement from 10 March 2021, the European Commission is implementing the second important building block of the EU Action Plan for Financing Sustainable Growth after the EU Taxonomy – transparency of sustainability.
Transparency plays a key role in the transition to a sustainable economy through improving environmental, social and governance (ESG) disclosures on the principal adverse impacts (PAIs) of investment decisions and sustainability characteristics of financial products. In this way, the EU regulation aims to channel more demand into sustainable investments and reduce the risk of green-washing.
In this blog, we summarize the key SFDR requirements and their challenges. Our aim is to give affected companies a better understanding of sustainability-related disclosures at company and product levels.