SFDR review: ABBL highlights priorities for a clearer and more coherent sustainable finance framework

Key priorities for improving the framework

Based on feedback from its members, the ABBL identified five priority areas where adjustments could significantly improve the functioning of the framework:

• Introducing clearer product classifications to support the adoption and understanding of sustainable financial products
• Removing entity-level transparency obligations regarding adverse sustainability impacts, which have proven particularly complex to implement in practice
• Improving product communication for retail investors, ensuring disclosures are clear and understandable
• Enhancing ESG data collection and interoperability between different sustainable finance regulations
• Clarifying the concept of sustainable investment, including its implications within the MiFID framework

Addressing these points would help create a regulatory environment that is both robust and operationally workable, enabling financial institutions to implement sustainable finance rules more effectively.

Ensuring regulatory coherence across the EU framework

A central challenge identified by the ABBL concerns the interaction between the different European regulations governing sustainable finance.

To ensure effective implementation, the revised framework must be better aligned with other key legislative instruments, including:

• the EU Taxonomy Regulation
• the PRIIPs Regulation
• the MiFID II Directive
• the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS)

Greater interoperability between these frameworks is essential to avoid overlaps, reduce operational complexity and support the long-term adoption of sustainable finance principles across the financial sector.

A realistic transition for implementation

The proposed changes will require financial institutions to adapt their systems, processes and governance structures.

For this reason, the ABBL stresses the importance of introducing a realistic transitional period, allowing institutions to implement the revised framework in a structured and proportionate manner while ensuring continuity of service and investor protection.

In addition, the ABBL emphasises the need to avoid national over-implementation. A harmonised and consistent application of the revised framework across the European Union is essential to preserve a level playing field, provide legal certainty for market participants and support the development of the European sustainable finance market.