The groups in the European Parliament are trying to reach a minimum agreement on the reform of the Sustainable Finance Disclosure Regulation, known as SFDR 2.0. One of the points causing the most friction is the labelling of products: the boundaries of these labels and whether the minimum criteria should be tightened to prevent greenwashing. In the context of this debate, the European Council has proposed replacing the current transparency categories of Articles 8 and 9 of the SFDR with three clearer product categories: “Sustainable”, “Transition” and “Basic ESG”. In each case, at least 70% of the portfolio must be aligned with the chosen strategy.
The Council adopted its position in June, while negotiations in the European Parliament are still ongoing. Only after that will the trilateral dialogue begin to agree on the final rules.
Ruben Feldman, Head of Sustainability and Development at ZKB/Swisscanto considers the anticipated introduction of the product categories “Sustainable”, “Transition” and “Basic ESG” to be positive. "Articles 8 and 9 have often acted as a sort of label, but this system is clearer and more defined from the perspective of the applicable criteria," he points out.
Regarding the establishment of a uniform minimum threshold of 70% for all categories, linked to specific sustainability or transition approaches, the expert says: "It creates a broader common base and facilitates both product design and comparability between the different strategies".
