SFDR: Sustainable Finance Disclosure Regulation

What is SFDR?

This is EU Regulation 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability disclosures in the financial services sector (known as the SFDR or Disclosure Regulation).

The regulatory technical standards (RTS) to be used by financial market participants when reporting sustainability information under this SFDR were published in the EU's Official Journal on 17 February 2023. Read our article on the topic: The Commission finally adopts the final version of RTS for the SFDR.

The Sustainable Finance Disclosure Regulation, along with the Taxonomy Regulation and the Corporate Sustainability Reporting Directive (CSRD), form the basis of the main regulations on sustainable finance.

Find out more about the Green Finance Regulation.

Entry into force

SFDR came into force on 10 March 2021.

The technical standards specifying the provisions applicable to the financial products defined in Articles 8 and 9 came into force in January 2023.

What are the SFDR requirements for companies?

All companies that market or advise on financial products in the European Union have transparency obligations with regard to non-financial or ESG (Environmental, Social and Governance) criteria.

SFDR aims to strengthen transparency obligations on ESG issues within the European Union, in particular to make it easier to compare financial products.

SFDR imposes rules on the publication of information on the sustainability of an investment.

What does the SFDR classification of funds under Articles 6, 8 and 9 entail?

Management companies must use the SFDR classification to provide investors with clear and comparable information on the sustainability of their investments.

SFDR defines three categories of financial products according to their contribution to sustainability:

• "Article 9" investments, which have a sustainable investment objective.

• "Article 8" investments, which declare that social and/or environmental criteria are taken into account.

• "Article 6" investments, which do not have a sustainable investment objective and do not declare that they take ESG criteria into account. These are all other investments that are neither "Article 8" nor "Article 9".