The European Commission has opened an extensive review into how SFDR has been implemented in financial services since its 2021 launch, and whether further changes are necessary.

SFDR came into effect in March 2021, requiring financial market participants and advisers to disclose how they integrate sustainability risks and principal adverse impacts in their processes at both entity and product levels.

Article 8 and 9 labels could be scrapped in upcoming SFDR consultation - reports

Just over two years on, the Commission is opening a widespread review of the regulations, unveiling a 44-page-long online questionnaire, which has a four-stage agenda to provide feedback on current SFDR requirements and its interactions with other sustainable finance legislation, as well as consider what changes may be required to make it more effective, which may include "potential establishment of a categorisation system for products".

In the document, the Commission said it is "seeking the views of respondents on how the SFDR works in practice".

It added: "In particular, we would like to know more about potential issues stakeholders might have encountered regarding the concepts it establishes and the disclosures it requires."

Why SFDR reporting on adverse impact is a win-win

Commissioner Mairead McGuinness announced back in December 2022 that the authorities would run a "comprehensive assessment of the framework to assess potential shortcomings - focusing on legal certainty, the usability of the regulation and its ability to play its part in tackling greenwashing".

Respondents have until 15 December to provide feedback, and the Commission said it is targeting public bodies and stakeholders who are more familiar with the SFDR and the EU's sustainable finance framework as a whole, although views from financial market participants, investors as well as national regulators "are [also] welcome".