The regulation on sustainability‐related disclosures in the financial services sector (SFDR) together with the EU taxonomy regulation will define completely new sustainability disclosures for financial products. Therefore, we welcome an opportunity to express our views on the product disclosure templates that European Supervisory Authorities were consulting on.
Our key messages are:
- Templates should be mandatory for all products distributed to retail investors. Standardisation will enhance retail investors / consumers’ understanding of the product and comparability across different products.
- Different templates for retail and institutional investors (with an option of no mandatory template for institutional investors) would help tailor disclosures towards the needs of different users.
- There is a need for a comprehensive and holistic approach towards sustainability-related disclosures. SFDR goes hand in hand with the EU taxonomy-related disclosures which we strongly suggest be incorporated in the templates (including the % alignment of the product with the EU taxonomy).
- Clarity is needed on the distinction between investments aligned with E/S characteristics, and those pursuing a sustainable objective. A Q&A or guidance by the Commission would be useful to ensure more regulatory convergence, assist the industry with the implementation of SFDR, and ensure clear disclosure to end-investors.
- To make the templates user-friendly for retail investors / consumers we suggest to provide for a summary / dashboard at the beginning of the document and identify key information to be included in the summary and at the beginning of each section. Space could be managed in a more dynamic way. Graphical representation (graphs and pie charts) is very welcome as it helps to understand sustainability features and composition of a product more quickly. Consumer testing shows icons are seen as useful, but could be more visually attractive and intuitive. Disclosures in different sections should be balanced in terms of substance and length of different sections.
- Digital media should be leveraged on to presenting information in a more user-friendly way. Information could be structured / layered through the use of drop-down menus and hyperlinks either to subsequent sections of the document or to external websites and other resources. Consumers should be able to easily access information regardless of the device or operating system or technology they are using to access the document.