The European Fund and Asset Management Association (EFAMA) has published six priorities for negotiations on the revised Sustainable Finance Disclosure Regulation (SFDR 2.0), calling for three clear product categories supported by workable criteria and available corporate data. Ahead of the first political trilogue, it reiterates earlier concerns that restrictive exclusions could undermine transition investment. It also calls for the revised framework, technical standards and sustainability preference rules under the Markets in Financial Instruments Directive and Insurance Distribution Directive to apply simultaneously, avoiding mismatches between product categories and distribution requirements. For the transition category, EFAMA wants the Council’s two conditions for exceptions to exclusions to operate as alternatives rather than cumulative requirements. A company could qualify through either 20% capital expenditure in Taxonomy-aligned activities or a Scope 1 or 2 emissions reduction plan. It argues that Parliament’s four cumulative conditions would make the category impossible to populate. Non-EU government bonds should also be eligible, subject to the manager’s documented assessment methodology rather than restrictions based on the issuer’s location. For the ESG basics category, EFAMA seeks explicit permission to measure outperformance at portfolio level against just one indicator, retention of the “proven positive track record” route and removal of Parliament’s additional Taxonomy-alignment disclosures. The remaining requests focus on flexibility in engagement, reporting and treatment of professional investors. EFAMA opposes mandatory product-level engagement strategies and reporting, favouring engagement as an optional tool disclosed where used. Managers should be able to select Principal Adverse Impact indicators suited to a product’s objectives and strategy, with clear justification. For alternative investment funds sold exclusively to professional investors, the opt-out should retain the Alternative Investment Fund Managers Directive’s definition of professional investor and should not prohibit funds from describing their sustainability features.
European Fund and Asset Management Association calls for six SFDR changes ahead of trilogues, targeting transition eligibility and disclosure requirements
The European Fund and Asset Management Association has set out six priorities for SFDR 2.0 trilogues, seeking workable product categories and simultaneous application of related sustainability rules. It calls for alternative rather than cumulative transition eligibility conditions, access for non-EU sovereign bonds and simpler ESG basics criteria. Other requests cover flexible engagement and adverse impact disclosures, plus an opt-out for funds sold only to professional investors that preserves their ability to describe sustainability features.