ESAs put forward amendments to sustainability disclosures for the financial sector

The ESAs have put forth amendments to the draft RTS for the SFDR. This development comes as part of their ongoing efforts to enhance sustainability disclosures within the financial sector.
As a reminder, the ESAs received a mandate from the EC in April 2022 to review and revise the RTS laid down in the SFDR Delegated Regulation.
The proposed amendments encompass several key areas. Firstly, the ESAs suggest the incorporation of new social indicators into the disclosure framework, intending to provide a more comprehensive coverage of social adverse impacts in comparison to the existing focus on environmental indicators. These social indicators include criteria such as the amount of accumulated earnings in non-cooperative tax jurisdictions, exposure to companies involved in tobacco production, and the gender pay gap among workers.
Additionally, the amendments aim to streamline the disclosure framework for PAIs of investment decisions on sustainability factors. This involves refining the content and definitions of various indicators, methodologies, metrics, and presentation standards. The ESAs also propose new financial product disclosures related to greenhouse gas emissions reduction targets, aligning with the broader goals of environmental sustainability.
Furthermore, the amendments encompass technical revisions to the SFDR Delegated Regulation, addressing aspects such as disclosures on how sustainable investments align with the DNSH principle, simplification of pre-contractual and periodic disclosure templates for financial products, and other technical adjustments related to derivatives, sustainable investment calculations, and provisions for financial products with underlying investment options.