European Commission launches “Sustainable Finance Disclosure Regulation” consultation

Here’s a note from Gibson Dunn pulled from this memo:

On 14 September 2023, the European Commission published “targeted“ and “public“ consultations on Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the “SFDR”). While the European Commission states that the views reflected in the consultation papers do not indicate its final position on the future shape of the SFDR, the tenor of both consultations provide useful insights into the potential implications of future reform for those financial market participants (“FMPs”) (which includes alternative investment fund managers (“AIFMs”)) who fall within the scope of the current regime.

The scope and detail of the questions asked in the consultation papers speak to Brussels’ serious concerns about the implementation of the SFDR since its introduction in March 2021, as well as its increasing contemplation of an overhaul of the existing framework. While any proposed changes would not come into force for several years, AIFMs and other FMPs should expect continuing legal uncertainty as it relates to future obligations under the SFDR.

The European Commission has set a deadline of 15 December 2023 for feedback on four distinct areas addressed in the consultations: (a) the current requirements of the SFDR; (b) its interaction with other sustainable finance legislation; (c) potential changes to disclosure requirements for financial market participants; and (d) the potential establishment of a categorisation system for financial products. The Commission aims to publish a finalised report on the SFDR in Q2 2024.