The European Banking Federation published a response supporting the European Commission’s proposal to reduce the complexity and improve the usability of sustainability-related disclosures for capital markets under a revised Sustainable Finance Disclosure Regulation (SFDR). It endorsed a three-category product classification with flexible compliance against binding criteria, a redesigned disclosure system focused on what is most meaningful for retail investors, and the removal of portfolio management services from SFDR scope. The federation urged co-legislators to preserve the Commission’s retail-oriented approach while making targeted clarifications across regulatory levels. It called for the MiFID and IDD sustainability-preferences framework to apply to all financial instruments and financial services, including portfolio management and investment advice under MiFID II, and for the sustainability-preferences advisory process to be significantly simplified. Further asks included allowing sustainability disclosures in PRIIPs for non-SFDR products, aligning SFDR 2.0 with sustainability-related elements of MiFID, IDD and PRIIPs including coherent transition periods, and ensuring coherence between Level 1 and Level 2 implementation while allowing immediate removal of deleted SFDR elements once the regulation takes effect. The response also recommended integrating general-purpose sovereign bonds into the Transition and Sustainable categories through credible methodologies, clarifying the treatment of use-of-proceeds instruments aligned with market standards such as ICMA Principles, introducing requirements or at least an EU code of conduct for ESG data providers that modify raw ESG data but fall outside the ESG Ratings Regulation, and withdrawing ESMA fund-naming guidelines to avoid overlap with the new SFDR categorisation.

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