What is the Sustainable Finance Disclosure Regulation (SFDR)?

The Sustainable Finance Disclosure Regulation (SFDR) is a European regulation that came into effect in March 2021 to increase the transparency on sustainability among financial institutions and market participants.

The SFDR applies to financial institutions such as banks, insurers, and asset managers operating in the European Union and has three main goals:

1. To improve disclosures so asset owners and retail clients can understand and compare financial products' sustainability characteristics.

2. To ensure a level playing field within the European Union so that European companies will not receive unfair competition from companies outside the European Union.

3. To counter greenwashing.