Glossary What is the Disclosure Regulation?

Disclosure Regulation (Sustainable Finance Disclosure Regulation [SFDR])

The aim is to make information on investment strategies with and without sustainability relevance, including their risks, transparent. The Disclosure Regulation (10/03/2021) identifies two categories of sustainable financial products that have different requirements: Article 8 and Article 9 products.

  • Article 8 products are those that promote environmental and social aspects, e.g. by implementing measures to increase the energy efficiency of buildings in a fund (this must be proven by indicators)
  • Article 9 products, on the other hand, have the investment objective of promoting sustainability goals and measuring the contribution, e.g. how much CO₂ is saved by building renewable energy plants

Sustainability risks are relevant for all financial products. All financial market participants must inform their investors about how they take sustainability risks into account in their investments and in the remuneration.

Sustainability risks under the Disclosure Regulation are environmental, social or governance events or conditions, the occurrence of which could have a negative impact on the value of an investment: extreme weather destroying properties or new regulations on CO₂ emissions from buildings that require costly renovations for non-sustainable buildings.

Financial market participants must also decide whether they take into account ("compliant") adverse sustainability impacts (PAIs). PAIs are impacts that a financial market participant has on its ecological and social environment. If they decide against this, this must be communicated prominently on the website and a reason must be provided.