📢 On Tuesday the 18th, the European Supervisory Authorities (ESAs) issued a set of recommendations to the European Commission as they look at revising the SFDR following the consultation which ran in September of 2023. The ESAs suggested the following adoptions:
🔷 Introduction of a product classification system with two categories: 1) Sustainable and 2) Transition. This differs from the proposal in the consultation which was more akin to the UK’s SDR labels.
➡️ Transition products could use a mix of KPIs, including taxonomy-related KPIs, transition plans and PAIs. The disclosures should provide investors with clarity on the level of ambition and performance of assets in the short and long term
🔷 Introduction of a sustainability indicator, providing a scale to grade financial products on sustainability, as well as sustainability-related disclosures for financial products, including for those without sustainability features.
🔷 The scale should rely on clear and objective criteria, which could include Taxonomy-related data, fossil fuel exposure or GHG intensity.
🔷 The definition of Sustainable Investment in Article 2(17) could be replaced with a more prescriptive definition, such as Taxonomy alignment.
🔷 Suggestion that a focus should be placed on finishing the Taxonomy, including the Social Taxonomy.
👉 Contact the Policy and Regulation team at Longevity for support in navigating the SFDR and EU Taxonomy.