SFDR requirements: guidance to assess your compliance and maturity

9 October 2023

Written by: Rafaella Scheer, , rafaella.scheer@axaclimate.com

SFDR assessment

The Sustainable Finance Disclosure Regulation (SFDR) and its Delegated Regulation were introduced incrementally in the European Union between March 2021 and January 2023. Its main objective is to enhance transparency, homogeneity, and comparability in sustainable finance disclosures.


Why assessing your conformity and maturity towards SFDR requirements matters?

As a financial market participant, you are now expected to disclose information on sustainability at entity level and at fund level, on your company’s website, and in precontractual and periodic documentation.

Many asset managers still struggle to fully comply with the regulation, as they lack a comprehensive view of the requirements at entity and fund level.

As an asset manager, it is critical for you to have a clear view of all these requirements and to conduct a gap analysis between what you do today and what the regulation requires you to do.

But complying with the regulation is not enough, as SFDR is voluntarily not prescriptive. Disclosure obligations ensure that financial market participants explain how they do – or don’t – consider sustainability challenges from a risk and impact perspective but do not provide standards on how to consider these challenges. As a result, SFDR is applied with different levels of maturity on the market.

ESG maturity is increasingly becoming a differentiating factor for funds. Therefore, asset managers need to improve the maturity of their ESG strategy.

So, in your position, not only do you need to be compliant but also mature. Understanding what mature practices are and how they compare to your peers is critical for you to deploy a strategic ESG roadmap.


SFDR keeps evolving. So, why should you focus on its current version?

The European Commission is conducting a consultation on SFDR until December 2023 to collect perspectives on its application and is planning an in-depth revision. Yet, as the European Commission has not published any timeline for this revision, current regulations will continue to apply in the near future.

As an asset manager, you need to be compliant while remaining aware of the market’s evolution. Moreover, having a clear vision of how your fund is positioned today will help you swiftly make the transition towards the new regulation. Being credible and transparent on how to disclose today’s regulatory requirements will help you have the necessary agility to adapt to tomorrow’s requirements.


How can AXA Climate help you with your SFDR conformity and maturity assessment?

To accompany you as a financial market participant in your SFDR journey, AXA Climate has created a document gathering all applicable SFDR requirements.

You can download this tool for free. It will provide you with a list of all the regulatory expectations linked to Regulation (EU) 2019/2088 and its Delegated Regulation (EU) 2022/852. Its purpose is to clarify the SFDR expectations per topic, distinguishing between publication obligations:

  • at entity level: asset manager, depending on the number of employees within the company and considering the “comply or explain” principle
  • at product level, according to your classification: products promoting environmental or social characteristics (article 8) and products with a sustainable investment objective (article 9)
  • the place of disclosure: pre-contractual documentation, periodicals, website, dedicated policy, etc.

We can even go further together.

AXA Climate supports numerous funds in the development or assessment of their responsible investment strategies and regulatory compliance. Our purpose is to provide a cross-sectional view of the maturity levels of financial players and their interpretation and use of SFDR in the development of their approaches.

After the gap analysis on your compliance, to be conducted on your own or with AXA Climate’s support, we can provide you with a qualitative analysis and position you on an internal benchmark in order to extract a level of maturity with recommendations of potential actions to be implemented to remain ahead of the curve, with the upcoming regulatory evolutions in mind.

Download our SFDR grid

Download Form SFDR Grid

For more information, contact Rafaella Scheer, , rafaella.scheer@axaclimate.com

View references
[1] Le règlement européen (UE) 2019/2088 dit Sustainable Finance Disclosure (SFDR) permet de classifier les fonds en fonction de leur capacité à prendre en compte les critères sociaux et ou environnementaux. Ceux relevant de l’article 9 sont jugés comme les plus ambitieux.

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