Chapter 4 - Reporting, standards, directives and regulation
The Sustainable Finance Disclosure Regulation (SFDR) is a European regulation introduced to improve market transparency for sustainable investment products, prevent greenwashing and increase the transparency of sustainability claims made by financial market participants.
The directive introduces comprehensive sustainability disclosure requirements covering a wide range of environmental, social and governance metrics at both company and product level.
The SFDR is a fundamental pillar of the EU's Sustainable Finance agenda and has been introduced by the European Commission as a key part of its 2018 Sustainable Finance Action Plan, which also includes the Taxonomy Regulation and the Low Carbon Benchmarks Regulation.
The Regulation does not only affect market participants within the EU, it also has a significant, indirect impact on operations outside the EU - especially for companies with global supply chains. Given that the regulation will have such an extensive impact on sustainability, many consider this to be a turning point for sustainable finance.
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https://finance.ec.europa.eu/sustainable-finance/disclosures/sustainability-related-disclosure-financial-services-sector_en