Insurance Sweden (Svensk Försäkring), the pensions and insurance lobby in Sweden, has advocated for a significant simplification of the European Union’s Sustainable Financial Disclosures Regulation (SFDR). The lobby contends that the SFDR should not serve as a product labeling system, according to a statement released following the European Commission’s consultation on overhauling the SFDR, which concluded just before Christmas.
Gerda Kinell, an economist at Insurance Sweden, expressed concerns about the current complexity of the regulation’s design, stating, “It is currently difficult to convey information to the customer and then for the customer to be able to compare different financial products.” Kinell attributed this difficulty to the complexity and lack of clarity in the templates used for pre-purchase information during customer meetings.
The lobby group emphasized one of the critical questions raised during the consultation: whether the SFDR should continue to function primarily as a transparency regulatory framework, requiring the provision of sustainability information for investment decisions, or if it should evolve into a product-labeling system for financial products.
Insurance Sweden argued in favor of maintaining the SFDR as a regulatory framework to enhance transparency and educate customers about sustainability risks, thereby facilitating informed decisions on sustainable investments. The group cautioned against developing an entirely new product-labeling system, citing potential time-consuming challenges in designing product categories and sustainability criteria for financial products.
Even before the conclusion of the European Commission’s consultation, market feedback indicated a lack of consensus on how to proceed with the contentious SFDR rules. In December, the European Securities and Markets Authority (ESMA) responded by issuing guidelines for funds claiming to contribute to sustainability objectives. The guidelines eased rules for funds using terms related to ‘sustainability’ in their names, departing from the original requirement for such funds to allocate at least half of their assets to “sustainable investments” based on SFDR definitions.
