Amendments Proposed by ESAs for Enhancing Sustainability Disclosures

The European Supervisory Authorities (EBA, EIOPA, and ESMA – ESAs) have published their Final Report, proposing amendments to the draft Regulatory Technical Standards (RTS) related to the Sustainable Finance Disclosure Regulation (SFDR). These amendments aim to enhance the framework for reporting on the environmental and societal impacts of investment decisions. Key proposals include:

• Introduction of New Social Indicators: The ESAs propose adding new social indicators to the SFDR to better assess the social impacts of investments.
• Greenhouse Gas Emissions Reduction Targets: The report suggests introducing new disclosures focused on the targets for reducing greenhouse gas emissions.
• Improvements to DNSH Disclosures: The ESAs recommend enhancing the disclosures related to how sustainable investments "Do No Significant Harm" to the environment and society.
• Simplification of Disclosure Templates: The proposal includes simplifying the pre-contractual and periodic disclosure templates for financial products to make them more user-friendly.
• Technical Revisions: Other technical adjustments are proposed, including the treatment of derivatives, the calculation of sustainable investments, and the provisions for financial products with underlying investment options.

The European Commission will review these draft RTS and make a decision on their endorsement within three months. These amendments will be applied independently of the comprehensive assessment of SFDR, which was announced by the European Commission in September 2023.

Download final report here.