On 10 October 2023, the European Commission published the opening remarks by Commissioner Mairead McGuiness at DG FISMA event. In her speech, Commissioner McGuiness discusses what is next for the Sustainability Finance Disclosure Regulation (SFDR).

In her speech, Commissioner McGuiness looks at where things are on sustainable finance and where the SFDR fits in. Her remarks include:

• The market is not using the SFDR in the way it was designed, it was meant to be about transparency but, instead, it is being used more as a labelling scheme.
• Market participants are advertising products as being light green or dark green, the so-called article 8 and article 9. However, the SFDR does not set out any binding thresholds and it does not contain strict definitions for key concepts. Notably, it does not define what a ‘sustainable investment’ is.
• Although the SFDR was negotiated to be flexible, to help market participants adapt to the new disclosures, the Commission appreciates that, in practice, this lack of binding thresholds and strict definitions can lead to uncertainty and investors find it hard to know if the product they want to invest in is sustainable. As such, there is a risk of greenwashing and mis-selling.
• The Commission needs to consider not just how the SFDR is working in practice but how it links to other parts of the EU sustainable finance framework. It also needs to consider how the SFDR interacts with changing rules in other parts of the world. This is why the Commission has launched an assessment of the SFDR.

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