FESE position on the review of the Sustainable Finance Disclosures Regulation (SFDR)

FESE welcomes the European Commission's initiative to review and simplify the SFDR framework. The proposed revisions are a positive step towards a more usable and comparable regime - provided that simplification does not come at the cost of meaningful sustainability disclosures or reliable access to ESG data.

Coherence across the sustainable finance framework

FESE stresses the importance of alignment between SFDR, the Taxonomy and CSRD. Recent changes under the Sustainability Omnibus are expected to reduce ESG data availability across the market. The SFDR review must account for this and avoid creating new data gaps or regulatory misalignments, including at Level 2 where a consistent treatment of derivatives is needed.

Data quality and threshold compliance

FESE raises practical concerns about the operability of the proposed 70% investment threshold. Clear rules are needed on how to treat constituents lacking ESG data, how estimates should be disclosed, and how compliance is assessed over time. On sovereign bonds, FESE recommends excluding them from both the numerator and denominator as an interim solution, pending the development of harmonised assessment methodologies.

Product categorisation and structured products

FESE supports the introduction of a structured product categorisation system, including a dedicated transition category. However, categories must be underpinned by clear, operational criteria to ensure consistency and investor confidence. For structured products specifically, FESE emphasises that regulatory responsibility for SFDR classification and disclosures must remain with the product issuer, not index providers.