We've compared the different positions of the European Commission, Council of the EU and the European Parliament on the review of the SFDR. Read below our recommendations for this trilogue.
Trilogue negotiations on the SFDR review are due to start on 22 October and envisioned to finish by the end of 2026.
Parliament's text is the strongest of the three on most issues. Its main weakness is ESG Basics: retail investors receive a single indicator on fossil fuel exposure and little other information from which to assess performance, which risks perpetuating the catch-all character of Article 8 under SFDR 1.0.
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Below, we set out our three priorities for the trilogue and the specific solutions we recommend to address them.
Parliament requires a single indicator for ESG Basics, exposure to the fossil fuel sector, and this must be retained. We ask that Parliament's own Transition wording be applied to Article 8, so that ESG Basics products report GHG emissions and fossil fuel exposure, together with one further indicator selected for relevance. This corresponds to the three indicators required by Council for Transition and Sustainable.
Council limits the effect of safe harbour to points (a) to (c) of the first subparagraph, so that PAI disclosure under point (d) continues to apply to products using the bypass. Parliament deems all conditions met. We ask the co-legislators to support the Council's scope.
The Commission proposal contains no opt-out, and we ask the co-legislators to maintain this position. If an opt-out is retained, Parliament's version is preferable to Council's, because it requires that no retail investor has access to the fund and requires a pre-contractual statement of non-categorisation.
A proposal released today by the European Commission to require large European companies to report on environmental and social issues will not guarantee ethical corporate behaviour according to the European Coalition for Corporate Justice (ECCJ). [1]
We are at a moment in history when we need our corporate businesses more than ever to help us cope with the challenges ahead. We, as a society, though, need to be clear in our understanding of the basis upon which society grants the privileges that now accompany the modern corporate form.
The European Coalition for Corporate Justice represented by the Environmental Law Service, the International Corporate Accountability Roundtable, and the Corporate Responsibility Coalition are proud to announce the launch of the Access to Judicial Remedy Project.
