The European Commission announced the launch of a new call for evidence, seeking input on its initiative to revise its Sustainable Finance Disclosure Regulation (SFDR), which aims to improve the regulation’s usefulness and to reduce reporting and compliance burdens for investors.

The Sustainable Finance Disclosure Regulation, in application since 2021, sets out how financial market participants, such as asset managers, have to communicate sustainability information to investors, regarding the integration of sustainability risks and the consideration of adverse sustainability impacts in their processes and the provision of sustainability‐related information with respect to financial products. The regulation’s underlying goals include helping to attract private funding to facilitate the transition towards greater sustainability, and helping companies pursue transition-related opportunities.

The new call for evidence forms part of a comprehensive review of the SFDR framework launched by the Commission in 2023. To date, the Commission said that feedback received as part of the review process has revealed that while widespread support for the regulation’s objectives is strong, key challenges in implementing and using the SFDR exist, including a lack of legal clarity on key concepts, limited relevance of some of the disclosure requirements, and inconsistencies with other parts of the EU’s sustainable finance framework, as well as issues related to data availability.

The Commission has also previously expressed concern that the SFDR’s classification system, such as the Article 8 and 9 classifications, were being used as de-facto sustainability quality labels, raising potential greenwashing risks.

In order to address these issues, the EU Commission said that its review aims to increase the legal clarity of the SFDR rules, and ensure its coherence within the sustainable finance framework, including the EU’s in-process measures to reduce sustainability reporting obligations for companies. Specific aims highlighted by the Commission include simplifying key concepts of the SFDR, and streamlining and reducing disclosure requirements, with a focus on the most essential information for investors.

The Commission also said that it will explore the case for categorizing financial products that make sustainability-related claims. Potential categories would reflect the various sustainability objectives of the financial products, such as products contributing to a sustainability objective, products contributing to the transition, or products contributing to other ESG strategies, the Commission added.

The call for evidence will remain open through May 30, 2025. The Commission has said that it aims to publish its SFDR revision in Q4 2025.

Click here to access the call for evidence.