GBIC on the SFDR review: right path to more clarity and practicality

The EU Commission has today presented its proposal for a review of the Sustainable Finance Disclosure Regulation (SFDR). One key goal of the reform is to make disclosure rules for sustainable finance products simpler and more effective, and to remove inconsistencies. 

The German Banking Industry Committee (GBIC) welcomes the proposal as an important step towards improved transparency for retail investors. At the same time, this new approach to the regulation eases the burdens on banks. “The Commission is setting the right priorities,” said Heiner Herkenhoff, CEO of the Association of German Banks – this year’s coordinators of the GBIC. “Less complexity and clear requirements are beneficial for all those involved – both the credit institutions and their customers.”

Germany’s banks believe that EU plans to introduce new product categories for certain finance products and to streamline customer information could create better guidance and comparability. However, tailor-made requirements are also needed within customers’ sustainability preference query according to MiFID II. Portfolio management and other financial instruments (such as bonds and structured products) should also not be overlooked in this context. 

“In future, investors must have access to the whole range of sustainable financial instruments,” said Herkenhoff. The review’s planned focus on the scope of application was also welcomed. Financial consultants, for example, would no longer fall under the scope of the SFDR. This is in line with the SFDR’s regulatory approach, which concentrates on the design and transparency of sustainable finance products. 

In addition, the disclosure requirements are to be simplified and, for example, the current PAI statement for undertakings is to be scrapped. This is to be replaced by less but more targeted product-related information on sustainability. “This will reduce unnecessary bureaucracy and increase transparency where it is actually needed – on the financial products themselves,” emphasised Heiner Herkenhoff.

“It is now a matter of designing the detailed regulations at the European level in such a way that the chosen path to more clarity and practicality remains consistent,” said Herkenhoff. “The goal must be to create a comprehensible, consistent and competition-neutral EU framework for sustainable finance instruments.”