ESMA Review of SFDR Delegated Regulation regarding PAI and financial product disclosures

EFAMA has responded to a consultation on the RTS for the SFDR by the ESAs. EFAMA’s response focuses on the need for a pragmatic and future-proof approach, alignment with the CSRD, the importance of *consumer testing, sufficient implementation time, and key recommendations for the SFDR Level 2 Review.
EFAMA emphasizes the importance of avoiding technical changes that could become obsolete with the upcoming review of the SFDR by the EC. EFAMA recommends a pragmatic approach focusing on clarity and simplicity for end investors. They underline the alignment of PAIs between SFDR and ESRS in terms of scope, definition, materiality, and timing. EFAMA also stresses the importance of consumer testing and cost-benefit analysis to ensure meaningful changes. They recommend establishing a minimum one-year gap between the publication of RTS and their implementation.
In response to specific questions on proposed social indicators, EFAMA raises concerns about data availability, materiality assessment, relevance, and simplification. They recommend aligning with ESRS standards and caution against including indicators without clear reporting requirements. EFAMA suggests prioritizing a selected few indicators that are universally relevant and warns against disclosing PAIs at an entity level, pointing out the importance of product-level disclosures**.