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Become a partnerTransparency on the financial market: the SFDR creates clarity
If you move money, you move markets. With the SFDR, the EU has therefore set a powerful lever in motion to promote sustainability. Get an initial overview and find out how VERSO can support you.
New requirements for financial products: Goodbye greenwashing
With the Green Deal, the EU has committed itself to sustainable economic activity. It was clear from the start: Sustainability efforts really take off when they have an impact on financial flows.
The SFDR obliges financial product providers to be transparent
In 2019, the EU adopted one of the first new measures to achieve the Green Deal targets: The Sustainable Finance Disclosure Regulation (SFDR) or EU Disclosure Regulation. It supplements the CSRD and the EU taxonomy and obliges financial product providers to be more transparent.
Their task: to prevent greenwashing of financial products – and to make the sustainability aspects of financial products more comparable.
Among other things, this is based on three SFDR categories for financial products:
Article 9
“Dark green products” or “impact products” with a sustainable investment objective
Article 8
“Light green products” or “ESG products” with environmental and/or social sustainability features
Article 6
Traditional financial products with little or no sustainability criteria
SFDR: Facts at a glance
Since 2023, the extended disclosure regulation for financial products in accordance with Articles 8 and 9 applies. Companies must disclose the specific ESG objectives/characteristics and describe how they intend to achieve them. Of course, this also includes an analysis of the results.
Which companies are affected by the SFDR?
The SFDR is aimed specifically at “financial market participants” in the EU, such as:
- Credit institutions/banks
- Investment firms
- Asset managers/capital management companies
- Insurance company
Double materiality in the SFDR
Parallel to the dual materiality of the CSRD, the interactions between financial products and the environment are also considered in the SFDR. “Sustainability risk” and “principal adverse impact” are the two sides of the coin here.
Sustainability Risk
… examines how ESG aspects influence the financial product or global business activities. Companies must also explain how they deal with these sustainability risks.
Principal Adverse Impact
… creates transparency about how the product or financial trading affects the environment and society. Financial market participants are obliged to submit an annual Principle Adverse Impact Statement (PAIS).
