Finance Watch, Better Finance, and the European Consumer Organisation (BEUC) call on the European Commission to remove any confusing categories (ESG Collection), and to make engagement a binding element, at least for the transition category.
On 25 February 2025, Finance Watch, Better Finance, and the European Consumer Organisation (BEUC) issued a joint statement in reaction to the Sustainable Finance Disclosure Regulation (SFDR) report from the Platform on Sustainable Finance (PSF).
The publication follows the mandate from the European Commission to develop a report to establish a new categorisation scheme with minimum criteria. It provides recommendations for three new product categories, outlining mandatory minimum criteria as well as disclosures for categorised and unclassified products.
The three civil society organisations welcome the PSF’s proposal to categorise financial products under the SFDR. However, they raise concerns regarding the proposed “ESG Collection” category and the absence of mandatory engagement requirements for products marketed as “transition investing”, both of which risk misleading investors.
In particular:
- The non-intuitive name of the “ESG collection category”, its broad definition as well as the absence of clear ESG criteria, may lead to the use of vague or weak ESG standards. Moreover, this category would not allow an exhaustive distinction between harmful products and other products. As a result, investment advisors could encourage retail clients to invest in unclassified products under the rationale that ESG considerations could be integrated.
- The proposal’s non-binding approach of engagement does not consider its essential role in the environmental transition. This allows for passive ownership, ultimately increasing the risk of greenwashing rather than preventing it.
To ensure that the core objective of the SFDR – contributing to one of the EU’s big political objectives: attracting private funding to help Europe make the shift to a net-zero economy – is met, we call on the European Commission to remove any confusing categories (ESG Collection), and to make engagement a binding element, at least for the transition category.
Joint response to the proposal of the Platform on Sustainable Finance on categorisation of products under the SFDR
SFDR categorisation joint position paper BETTER FINANCE, BEUC, Finance Watch
