EBF RESPONSE

EBF Calls for Pragmatic Simplification of Sustainable Finance Disclosure Regulation

z

Brussels, 5 June 2025 – The European Banking Federation (EBF) has submitted its detailed response to the European Commission’s call for evidence on the review of the Sustainable Finance Disclosure Regulation (SFDR). The EBF welcomes the upcoming revision of the SFDR to strengthen the effectiveness of the regulation and emphasises the need for a pragmatic approach with a particular focus on the needs of retail investors, defining simpler and more meaningful disclosures.

The EBF’s key recommendations include:

• Focus on the needs of retail investors: Disclosures and product categories need to be as simple and understandable as possible. Only the information that is needed should be disclosed. The current system is too complex with too many technicalities, leading to information overload, which often has the opposite effect on retail investors and their interest in sustainable investing.
• Principal Adverse Impacts: Delete the annual PAI statement (entity-level), as it is overly complex, burdensome and not useful for stakeholders. At least, it must be significantly simplified. We recommend using PAIs only at the product level and reducing them to the most meaningful indicators for investors. Reducing and simplifying PAIs is essential to ensure that retail investors understand them, which is currently not the case.
• Disclosure system: Revamp the product-level disclosure system and limit it to pre-contractual and periodic disclosures. Website disclosures must not be a separate disclosure type, but rather the means of communicating pre-contractual and periodic disclosures. Significantly simplify and shorten all product-level templates and focus only on the most meaningful disclosures. These disclosures need to be as short and clear as possible for retail investors.
• Product categories: Build the product categorisation system as much as possible on elements that have already become familiar to the market. We generally support three new product categories proposed by the EU Platform on Sustainable Finance. However, we see several problematic points:
  • The criteria for categories might still be too complex, unclear and broad. Limiting vague and broad elements in product classification is important to avoid inconsistent market practices across the EU.
  • The distinction between categories needs to be as intuitive as possible. Retail investors must be able to easily distinguish between the product categories.
  • The name of the ESG collection category is ambiguous and might even mislead retail investors. A different name should be used. It is important both for distinction and meeting investors’ expectations regarding their investment strategy.
  • Any product category should be tested on the market, including with retail investors beforehand. Product categories should be as far as possible interoperable with categories in other jurisdictions.

• Portfolio management: Remove portfolio management services from the SFDR scope. At least, delete website disclosure requirements for portfolio management services and other tailor-made products, such as special funds.
• Consistency:
  • Improve coherence across the whole EU Sustainable Finance Framework, in particular with MiFID II, IDD and PRIIPS. Align MiFID II rules with new categories to match sustainability preferences with new categories and financial products.
  • Interdependencies with other regulations should be looked at for consistency as well: Benchmarks Regulation with SFDR for index funds, CSRD and Taxonomy with SFDR for data availability.
  • Apply a consistent approach for derivatives across SFDR and related products and entities’ indicators.

• Balance: Strike a balance between implementation costs for the financial sector and the benefits for investors.

x

About the EBF:

The European Banking Federation is the voice of the European banking sector, bringing together national banking associations from across Europe. The EBF is committed to a thriving European economy that is underpinned by a stable, secure and inclusive financial ecosystem, and to a flourishing society where financing is available to fund the dreams of citizens, businesses and innovators everywhere.