The Sustainable Finance Disclosure Regulation (SFDR), also known as the EU Disclosure Regulation, aims to establish transparency standards for sustainable financial products, helping investors make informed decisions regarding sustainable investments. The regulation applies to financial market participants and financial advisors, imposing disclosure requirements at both the company and product levels. These requirements include how sustainability risks and factors are integrated into investment processes. Enhanced disclosure obligations apply when a financial product is marketed as having environmental characteristics. In Germany, the Federal Financial Supervisory Authority (BaFin) monitors compliance with these disclosure obligations.
The SFDR represents a key step in implementing the European Sustainable Finance Action Plan (SFAP). By adhering to sustainable standards, building portfolios can enhance their appeal to investors, thereby improving or maintaining long-term competitiveness.
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