SFDR continues to evolve: more granular disclosures to be proposed on investments’ exposure to fossil gas and nuclear energy activities


Financial products with exposures in fossil gas and nuclear energy are likely to have more granular reporting requirements under the Sustainable Finance Disclosure Regulation (“SFDR”).

The European Commission has tasked the European Supervisory Authorities (the “ESAs”) to propose SFDR amendments to the information disclosed in pre-contractual documents, on websites and in periodic reports with regards to fossil gas and nuclear activities. The driver behind the request is to ensure that investors receive information reflected in the Complementary Climate Delegated Regulation that was formally adopted in March 2022. To recap, this set the criteria, not without some controversy, for specific gas and nuclear activities to be considered in line with EU Taxonomy’s climate and environmental objectives to help accelerate the shift from fossil fuels towards a climate-neutral future.

Specifically, the European Commission has asked that the amendments proposed by the ESAs ensure that the disclosures about the degree to which investments are EU Taxonomy-aligned have full transparency and specify the proportion for investments on specific nuclear and gas activities (those that are covered by and compliant with the Complementary Climate Delegated Regulation).

Ultimately, this would mean more granular quantitative reporting than the current SFDR Level 2 (coming into force from January 2023) which only requires specification of EU Taxonomy-aligned investments versus non-EU Taxonomy-aligned investments, with no deep dive into specific sectors or sub-sectors.

It is clear the EU Sustainable Finance Agenda will continue to move apace, and the ESAs have been informed this is an urgent matter with proposals to be submitted by 30 September 2022 at the latest. For further information please see here or contact Laura Houet or Rachel Lowe.