The European asset management trade body has joined forces with other financial sector lobby groups to call on the European Commission to delay the adoption of new technical rules for the sustainable finance disclosure regulation (SFDR) until the broad review of the latter is complete.

At the end of 2023 the European supervisory authorities (ESAs) published draft regulatory technical standards (RTSs) about indicators for “principal adverse impacts” (PAI) and other technical issues that emerged since the SFDR was introduced.

The Commission is currently assessing the RTSs while also dealing with responses to a consultation on a potentially fundamental overhaul of the regulation.

Efama, together with trade bodies such as the European Banking Federation and Insurance Europe, has written to the Commission to register concern about a lack of coordination between the two regulatory projects.

According to the industry bodies, findings of consumer tests conducted by the ESAs based on the proposed rule changes “demonstrate that investors still struggle to understand the aim and context of disclosures as well as their content”.

They said it was “critical” that the review of the RTSs and the underlying legal foundations are coordinated.

“Consequently, our associations strongly support the EC delaying the adoption of the level 2 measures proposed by the ESAs to reconsider changes to the SFDR holistically,” the industry bodies wrote in their letter.

“Regardless of some improvements in the RTS, the assessment of whether changes and new disclosures should be introduced in the RTS should be done together with the holistic review of the framework and after major changes to the level 1 concepts,” they continued.

Merging the so-called Level 1 and Level 2 reviews of the SFDR would “guarantee legal certainty and deliver a successful law-making process, preventing overlapping, doubling efforts and incurring additional costs”, they argued.

The lobby groups are also calling for grandfathering measures and at least a year for implementation once any changes to the SFDR are published, “to be adjusted upwards to align with the availability of underlying data and the breadth of the changes”.

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