ALFI responds to SFDR review consultation by European Commission

ALFI submitted its response to the European Commission’s targeted consultation concerning the implementation of the SFDR. ALFI’s response outlines several key recommendations for enhancing the current SFDR regime:
Firstly, ALFI proposes that entity level PAI disclosures be adequately addressed under the CSRD without imposing additional disclosure requirements under SFDR. ALFI contends that such duplicative measures contribute minimally to investor understanding.
Secondly, ALFI expresses reservations about expressing product level disclosures on a scale. The organization argues that such an approach is prone to diverse interpretations, hindering the provision of sufficient explanations regarding the relevant ESG approaches.
Furthermore, ALFI advocates for the preservation of the existing SFDR regime, particularly emphasizing the importance of maintaining the disclosure regimes outlined in Article 8 and Article 9 of SFDR. ALFI highlights that market participants have invested substantial financial and implementation efforts in adapting to these regimes, and investors have become accustomed to them over the years.
In addition to endorsing the current SFDR framework, ALFI puts forth a proposal for a voluntary labeling regime alongside SFDR. This suggested regime aims to prevent the de facto use of Articles 8 and 9 as labels while enhancing investor comprehension, particularly among retail investors. ALFI suggests categorizing labels, such as Article 9 for impact and Article 8 for transition, and envisions a flexible approach to investment management. To explore the structural aspects of such labels, ALFI recommends initiating a dedicated consultation process.