SFDR REVIEW: CONSULTATION RESPONSE NETHERLANDS
***
Introduction
The Sustainable Finance Disclosure Regulation (SFDR) has proved to be an important first step in
developing the EU sustainable finance framework. 1 The building blocks are nearly all in place, now
it is time to improve the effectiveness and efficiency of the framework in order for it to achieve its
intended goals of reorienting capital flows towards sustainable investments, manag ing financial
risks and fostering transparency and long-termism. This is crucial for the EU to improve its
resilience and competitiveness thereby setting it on a pathway to sustainable economic growth.
Problem analysis
1.

Misuse of Articles 8 and 9 as Sustainability Labels: The categorization of financial
products along the lines of SFDR Articles 8 and 9 funds has led to their misuse as sustainability
labels in the market. However, these categories are not intended to be used as product labels
and are not suitable for this purpose. This misuse can lead to greenwashing, as the distinction
between products that promote sustainable characteristics and products with sustainable goal
is not clear.

2.

Definition of Sustainable Investments: The definition of sustainable investments under
SFDR is an open norm that allows for a broad interpretation that does not always align with
investor expectations. This leads to a wide variation of investments and investment strategies
being considered "sustainable," while these considerations are not always in line with investor
expectations.

3.

Difficulty in Differentiating Between Products: Consumers find it difficult to distinguish
between products with sustainable characteristics and products that have sustainable
investment objectives. Research by the AFM already showed that sustainable funds vary widely
in how they define sustainability, making it harder for investors to select a financi al product
that meets their sustainability preferences.

4.

Data Availability: The availability and quality of data remain an issue for financial market
participants in complying with the SFDR.

5.

Complexity of Disclosure: The disclosed information based on the SFDR is extensive and
often not easy to understand and compare, especially for retail investors. It is difficult for
these investors to assess the actual degree of sustainability of a financial product based on
the SFDR disclosures in the mandatory product information template.

6.

Additional Obligations for Sustainable Products : The SFDR sets additional reporting
requirements for sustainable financial products, which adds to the reporting burden making
them less competitive compared to non-sustainable alternatives. However, also for nonsustainable financial products it is important to have information on its sustainability impact
and risks, perhaps even more so.

Together with the EU Taxonomy, Corporate Sustainability Reporting Directive, EU climate and Paris
benchmarks and the upcoming CSDDD and ESG rating regulation.
1

Overview of identified problems and potential solutions
#

Identified Problems

Potential Solutions

1

Misuse of Articles 8 and 9 as
Sustainability Labels

Include a labelling regime. E.g. three different labels:
(1) transition label (2) sustainable label, and (3)
mixed sustainable fund. Each with minimum
requirements and limited additional disclosure
obligations. The naming of funds should be aligned
with the classification and investment strategy of the
funds.

2

Definition of Sustainable
Investments

Refinement of the definition of sustainable
investments to align more closely with investor
expectations and the need for financing the transition.

3

Difficulty in Differentiating
Between Products

Development of clear guidelines and indicators to
differentiate between various types of sustainable
products.

4

Data Availability Issues

Promotion of better data collection and quality, and
ensuring consistency in reporting requirements.

5

Complexity of Disclosure

Simplification and clarification of information
templates for better accessibility and understanding
by retail investors.

6

Additional Obligations for NonSustainable Products

Include disclosure requirements for all financial
products offered in the EU, regardless of their
sustainability-related claims. This ensures a better
level-playing field and comparability between
products:
• include minimum principal adverse impact
disclosures (e.g. greenhouse gas emission) for
all investment products (sustainable and not
sustainable).
•
Additional disclosure requirements when a
product makes a sustainability claim. E.g.
information about engagement by a transition
product.