Sustainable Banking Coalition
SBC
Our aim is to unify the voices of environmental, social, and governance impact-focused financial institutions, leveraging their role as sustainable frontrunners in the EU financial sector to actively influence the development of key EU sustainable finance and banking policies and drive capital towards sustainable initiatives.
ID: 909433798470-50
Lobbying Activity
Response to Revision of EU rules on sustainable finance disclosure
28 May 2025
The Sustainable Banking Coalition welcomes the upcoming review of the SFDR by the European Commission. The Coalition recognizes the SFDR as a key piece of the EU sustainable transparency framework. Its upcoming review presents a timely opportunity to address ambiguities identified through practical experience with the regulation, streamline navigation challenges, and strengthen its applicability. By building on the existing framework, the SFDR can evolve into a robust labelling system that effectively channels capital toward sustainable investments, strengthens investor confidence, and enhances EUs competitiveness. To achieve this, we propose the following three key areas for improvement: 1) Clear labelling with minimum criteria for financial products The SFDR was initially designed as a disclosure framework, not a labelling system, and as such lacks well-defined categories with strict criteria. Despite this, it has often been used by the market as a de facto label for green financial products, leading to significant challenges. In particular, the current ambiguities between Article 8 and Article 9 have resulted in misclassifications, greenwashing, and the exploitation of loopholes. It is now essential to move beyond SFDR as a mere disclosure framework and establish a genuine labelling system for green financial products. It should include clearly defined categories, notably: Sustainable investment: For investors who want confidence that their funds are invested in businesses and projects that are already significantly sustainable with respect to their business practices and business segments. Responsible investment: For investors who want to ensure their money is not fostering harmful activities but are not necessarily looking for high-impact sustainability investments. Transition investment: For investors who want to finance businesses in their transition to sustainability, with measurable science-based progress toward net-zero goals. Each of these categories must have clear minimum criteria, and standardized calculation methods. 2) Minimum disclosure requirements for all financial products Currently, there is an imbalance in sustainability disclosures: sustainable investments face a heavy reporting burden, while fossil-fuel-based financial products have no specific requirements. The SFDR review presents an opportunity to rebalance this system by implementing disclosure obligations for funds contributing to environmental or social harm. There should be a baseline level of mandatory disclosure for all funds under the SFDR. All financial products that do not meet sustainability criteria and therefore fall outside the three abovementioned SFDR categories should be considered as "Indifferent Funds". All indifferent products should be required to disclose a targeted set of key sustainability metrics. In addition to minimum disclosures for all funds, harmful funds should include a clear warning, such as: "Warning: This investment supports harmful sectors" for funds that fall under a list of high-risk industries such as fossil fuels, deforestation-linked businesses, or companies with poor human rights records. 3) Better alignment with other EU legislations While investors are increasingly interested in investing their money sustainably, the current framework is not fit for purpose. The issue is not the availability of sustainable products, but rather the lack of a cohesive ecosystem that provides investors with the necessary confidence, information, and advice to make informed choices. If the SFDR introduces a clear categorization of sustainable investment products, it should then serve as the cornerstone and be integrated into other relevant regulatory frameworks, such as MIFID, IDD, PRIIPS to guide retail investors in understanding the financial products available to them. (Please see document attached for more details)
Read full responseMeeting with Jonathan Denness (Head of Unit Regional and Urban Policy)
12 May 2025 ยท Multiannual Financial Framework (MFF) implications for retail banks in financing the clean transition