An “overall low level of disclosure on the degree of alignment with the objective of the Paris Agreement” is among the findings as the EU’s three financial supervisory authorities grade the industry over the first year with “voluntary disclosure of principal adverse impact” under the Sustainable Finance Disclosure Regulation (SFDR).

The 25-page report by ESMA, EBA and EIOPA have surveyed their corresponding national supervisory bodies across the EU’s member states, with the purpose of developing “a preliminary, indicative and non-exhaustive overview of good examples of best practices, and less good examples of voluntary disclosures”.

“The extent of compliance with voluntary disclosures varies significantly across respondents, but, overall, the first disclosures since the application of the SFDR are not very detailed – this is expected to change for the disclosures made for the 2022 reporting period once the SFDR Delegated Regulation applies,” they observe in a press release.

PostTrade 360 Nordic 2024

The SFDR is phased in by the EU as a measure against “greenwashing”. It mandates market participants to disclose 14 defined indicators of principal adverse impact. By 30 December 2023, they should report their principal adverse impact at product level (by a postponement made autumn 2021). ESMA has published a visual representation of the timeline here, with possibly-easier-to-penetrate alternatives produced by consultancies here and here.