EU to Tighten SFDR Rules to Combat Greenwashing
The European Commission is set to revise the Sustainable Finance Disclosure Regulation (SFDR) later this year. The current rules, implemented in 2022, have faced criticism for being too vague and allowing investments in unsustainable activities under the guise of sustainability.
The SFDR currently uses three labels for sustainable financial products, each with its own criteria. However, non-governmental organisations (NGOs) and associations have called for fossil fuel developers to be excluded from these investments. They argue that the current rules do not effectively prevent greenwashing.
Over 120 signatories have urged the European Commission to strengthen the SFDR. They want clearer rules that truly promote sustainability and prevent financial products from claiming to be 'green' when they are not.
The European Commission is expected to propose revisions to the SFDR around the end of 2025. These changes aim to address the concerns of critics and ensure that sustainable finance rules effectively combat greenwashing.
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