Asset managers’ SFDR disclosures still too generic despite 'credible progress'

Analysis of 30 European asset managers’ reporting under the EU’s Sustainable Finance Disclosure Regulation (SFDR) reveals “patchy and inconsistent” progress on transparency.

Research by ShareAction shows that 90% of Europe’s 30 largest asset managers now provide entity-level disclosures on how they assess and mitigate sustainability risks – but  just 12 offer substantive and comparable detail.

Similarly, while most asset managers publish some form of disclosures on how they manage sustainability around individual investment products, a majority of these disclosures are too high-level and generic, failing to give end investors relevant details on due diligence and engagement with portfolio companies.

Isabella Ritter, Senior EU Policy Officer at ShareAction, said: "The SFDR was meant to lift the lid on how financial actors manage the sustainability impacts of their investments. While some asset managers are leading the way with strong disclosure practice, too many still rely on general language and fail to explain which harms they’re addressing or what they do when companies they invest in don’t improve.”

Recommendations for SFDR review

ShareAction’s research comes as the SFDR is up for review by the European Commission later this year – with a ‘call for evidence’ open until May 30.

With the report, the NGO warns that the EU’s current drive for sustainability regulation simplification “should not come at the expense of ambition and prevent the SFDR framework from progressing to its next stage”. 

Its recommendations include maintaining and clarifying entity-level disclosure rules to ensure financial institutions clearly report how they identify and act on environmental and social harms across their entire portfolios; requiring engagement disclosures across all new product categories; and making engagement mandatory in a transition product category to ensure investors use their leverage to advance investee companies’ transition.

"Our findings show that credible, clear disclosures are possible – but they are still far from the norm. The framework must empower end investors and consumers to spot greenwashing, identify truly sustainable products, and direct their money towards supporting the EU's green and social goals," Ritter added.

“Too often, asset managers make sustainability claims without showing how they plan to deliver on them. That’s why we focused on engagement disclosures—to examine which concrete actions they take with investee companies to address the negative impacts of their investments. If a product is marketed as sustainable, it should walk the talk. For this reason, engagement should become a core part of the SFDR’s future categorisation system."

If done right, the SFDR can help close the sustainable investment gap by providing end investors with the data they need to channel capital away from harmful business and hold financial actors accountable for their impact on people and planet.