Final Call for Evidence on the shape of SFDR

Following the public and targeted consultation on SFDR launched in 2023 (the “Consultations”) and the anticipated publication of the new proposals in Q4 this year, the European Commission is providing the broader market with, what seems to be, a final opportunity to input on the shape of the new SFDR regime (the “Call for Evidence”). It is noted, however, that in finalising its proposals, the Commission may carry out targeted outreach. 

Although the Commission has noted the continued widespread support for the objectives of SFDR, they have recognised that certain limitations need to be addressed to ensure that the objectives of the framework are achieved. The Call for Evidence makes it very clear that the Commission’s aim is to simplify the regime and streamline the requirements applying to firms, a theme that has been driven via the ‘Omnibus’ initiative, which the Commission recognised will be taken into account in finalising the rules. 

The objectives of the Call for Evidence also places a focus on the simplicity of the regime for retail investors in particular and suggest that product categories suggested by the platform on sustainable finance will remain in some form with specific reference to products contributing to a sustainability objective, products contributing to the transition, or products contributing to other ESG strategies. In addition, the Commission has recognised the importance of considering different types of investors and financial products as well as the international reach and exposure of investments, which is of particular relevance to global private market. 

It is encouraging to see the Commission’s focus on gathering feedback to ensure that the new SFDR regime is fit for purpose and operates effectively. It is also helpful to see an acknowledgement that retail investors should have different protections to professional investors. The deadline for feedback is 30 May 2025 with the Commission still working towards Q4 2025 for the publication of the proposals. So, yet another twist in the SFDR journey and whilst time will tell,  we may see a more simplified and proportionate outcome.             

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