AMICE calls for a proportionate and workable revision of SFDR

AMICE welcomes the European Commission's proposal to revise the Sustainable Finance Disclosure Regulation (SFDR) to improve legal clarity and consumer understanding. Consumers are the focal point of our members' activities; it is essential that all proposals consider all aspects of truly improving the regulation for consumers' benefit.

We call for a more proportionate, coherent and workable SFDR that reflects the realities of insurance-based investment products and supports long-term, risk-appropriate savings for European consumers.

• 70% threshold: a more proportionate and flexible approach is needed
• Insurers' traditional products and general account products, including the treatment of sovereign bonds: this remains consistent, workable and reflective of insurers' long-term investment strategies, subject to certain improvements
• Multi-option products: the proposed approach risks limiting consumers' access to sustainable investment options and creates uncertainty over responsibility between insurers and asset managers
• Transition products: the proposed criterion on deriving no more than 1% of profitability from fossil fuel activities may hinder true progress to real-economy decarbonisation, and should be replaced with forward-looking transition metrics, contingent on credible transition plans and including transparent reporting on progress and outcomes
• The safe harbour provision: the proposals should support transition in practice by introducing an alternative or complementary safe harbour recognising investment in sustainability-related fixed-income instruments, including green, social, sustainability and sustainability-linked bonds
• Scope of the exemption for "closed-ended type" products: interpretative ambiguity may lead to uncertainty about what the exemption specifically applies to, which should be clarified to all products closed to new subscription and not just technically close-ended products
• Level 2 measures and implementation uncertainty: Level 1 cannot function without the timely publication of Level 2 measures, so implementation deadlines should only be triggered once all Level 2 standards are finalised and published, after a sufficient consultation period and robust consumer testing
• Data availability: data requirements need to be in line with Corporate Sustainability Reporting Directive (CSRD) timelines and proportionality, including a proportionate calibration of Article 12a
• Consumer information and template design: templates need to be accessible and easily understood, so consumer testing is key to ensuring clarity, accessibility and usability
• Implementation timeline: the plethora of different aspects of change, including Level 2 requirements, the volume of change and cross-framework coordination will be resource heavy, and we propose the implementation period should be extended from the proposed 18 months to 24 months
• The need for regulatory coherence: there needs to be full alignment with Markets in Financial Instruments Directive (MiFID), Insurance Distribution Directive (IDD), packaged retail and insurance-based investment products (PRIIPs) and the CSRD, and to establish this, the revised SFDR should only be implemented after cross-framework alignment is achieved
• Transitional arrangements regarding entity-level disclosures: we call for an EU-level no-action letter to confirm that financial market participants will not be subject to enforcement action should they choose not to publish entity-level PAI statement during the transitional period.
• Following this review, the SFDR will create a clearer, more reliable and consumer-friendly framework. Important adjustments reflecting insurance-based investment products, safeguarding prudential requirements and providing consumers with meaningful and comprehensible information will make it better calibrated to reach its objectives.

Read AMICE's Position Paper in full.