ABBL response to the European Commission’s call for evidence on the SFDR

1. Simplification of pre-contractual and periodic templates

The current disclosure templates are overly complex, particularly for retail investors. ABBL recommends:

• Limiting pre-contractual documents to three pages;
• Incorporating a dedicated ESG section within the PRIIPs Key Information Documents (KIDs), showing a product’s ESG intensity and highlighting only significant binding ESG objectives;
• Presenting only the principal binding objective and key Principal Adverse Impact (PAI) indicators, without unnecessary technical detail.

Simplification would make sustainability information more accessible and meaningful to investors, enhancing transparency without adding an excessive burden on financial institutions.

2. Alignment of PAI and KPI reporting with the new ESRS standards

ABBL supports updating the current PAI indicators to align with a new set of Key Performance Indicators (KPIs) based on the upcoming European Sustainability Reporting Standards (ESRS). This would allow financial market participants to directly use sustainability-related data disclosed under the Corporate Sustainability Reporting Directive (CSRD), reducing duplication and administrative costs. Specific proposals include:

• Harmonising PAIs using a preselected list of ESRS standards;
• Allowing proportionality through the use of NACE code classifications for companies not subject to CSRD;
• Removing Article 10 website disclosures and Article 4 entity-level disclosures, which would otherwise overlap with CSRD reporting requirements.

Such alignment would improve coherence across regulatory frameworks and ensure that sustainability disclosures are both useful and efficient.

3. Restriction of sustainability promotion to classified financial products

To strengthen market integrity and protect investors, ABBL proposes restricting sustainability and ESG claims to financial products that meet clear and robust criteria. Financial products labelled as “unclassified” should not be permitted to promote sustainability, transition, or ESG features. This measure would help mitigate greenwashing risks and preserve trust in sustainable finance offerings.

Looking ahead

The ABBL believes that the SFDR review is an opportunity to enhance the regulation’s clarity, usability, and effectiveness. The key areas for improvement include:

• Clearer definitions and supervisory alignment;
• Streamlined and interoperable disclosure requirements;
• A pragmatic, investor-friendly product classification system, comprehensible to all market participants.

It will also be important to provide clarity on how the future classification system will relate to the existing Article 8 and 9 requirements and how local regulators could support a realignment process.

Read the full response here:

Or