Overview of the legal framework of the Green Deal

Sustainable Finance Disclosure Regulation (SFDR)

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Sustainable Finance Disclosure Regulation (SFDR)

The SFDR obliges financial market participants to disclose detailed information on the sustainability risks of their products. This should take into account the negative impact on sustainability as well as information on how these risks are factored into investment decision-making processes. The aim is to create uniform sustainability standards in financial markets.
As part of ESG reporting, providers of financial products must disclose the extent to which the investments are sustainable, i.e. ‘do not cause significant harm’.
Financial products include investments and investment funds, insurance investment products, private or occupational pension schemes and insurance and investment advice.

Objectives:

Capital flows into sustainable investments Improving the transparency of financial products

Those affected are:


Financial market participants

Financial advisors

Investors
Schedule:
Since 2021
According to the Principle Adverse Impacts Statement, financial market participants must state on their website whether they take into account the main adverse impacts of investment decisions on sustainability factors. They must also disclose their carbon footprint. Negative impacts must be disclosed online (comply or explain - for companies with more than 500 employees).
Since January 2022
companies must gradually publish the 'Declaration of significant adverse sustainability impacts'.
Since June 2023
financial market participants must provide detailed information on 20 points (18 of which are mandatory) in their ESG reporting.
From mid-2024
a historical comparison must be made between the first and second reference periods.
A general distinction is made between three product categories:

  • ‘Dark green’ financial products: Financial products that aim for a sustainable investment
  • ‘Light green’ financial products: Ecological and social features are advertised
  • ‘Conventional’ financial products: Have no sustainable features

Further information:

[EUR-Lex] Sustainable Finance Disclosure Regulation
EU Taxonomy, CSRD, SFDR: Sustainability in the EU | Sustainability& (sustainabilityand.com)