MFA submitted a comment letter encouraging the European Commission (EC) to reform the existing framework of the Sustainable Finance Disclosure Regulation (SFDR), rather than fully replace it. The letter is in response to the EC’s consultation on potential changes to SFDR.
The letter emphasizes that overhauling the SFDR framework would heighten the risk of investor and market confusion. In addition, a new framework would waste the significant time and resources alternative asset managers invested to comply with the current rules.
MFA’s comments also highlight that the SFDR focuses overwhelmingly on sustainability in securities on the long side but overlooks the role of indirect exposures. Accordingly, the responses encourage the EC to adjust SFDR so that it better recognises the role of tools like derivatives and short positions in incentivising companies towards more sustainable business practices.
