On 4 December 2023, the European Supervisory Authorities (ESAs) published a final report setting out proposals to amend the draft regulatory technical standards (RTS) to Commission Delegated Regulation 2022/1288 supplementing the Sustainable Finance Disclosure Regulation (SFDR).

The final report responds to a mandate sent by the European Commission (Commission) to review certain aspects of the operation of Commission Delegated Regulation 2022/1288 including the disclosures of principal adverse impacts (PAI) of investment decisions on sustainability factors and to introduce disclosure of financial products’ decarbonisation targets. The ESAs published a consultation paper in April 2023 and having considered the feedback to the consultation the ESAs have adjusted the draft RTS in several areas.

The draft RTS cover the following topics as requested in the Commission’s mandate:

  • An extension of the social PAI indicators.
  • Other changes to the PAI disclosure framework.
  • A new financial product disclosure of greenhouse gas emission reduction targets.

The ESAs are also proposing some improvements and simplifications to the financial product templates, contained in Annexes II-V of Commission Delegated Regulation 2022/1288, including a new “dashboard” with a simple summary of key information.

In addition, the ESAs are proposing minor technical amendments to Commission Delegated Regulation 2022/1288 relating to:

  • Enhanced disclosure of how sustainable investments comply with the “do not significantly harm” principle.
  • Revision of the provisions for products with investment options such as multi-option products.
  • Other technical changes including harmonised calculation of sustainable investments and a requirement to produce the disclosures in machine-readable format.

The Commission will study the draft RTS and decide whether to endorse them within three months. The draft RTS would be applied independently of the comprehensive assessment of the SFDR announced by the Commission in September 2023 and before changes resulting from that assessment would be introduced.