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BLOG. 5 min read

The Next Phase of SFDR – Facilitating Infrastructure Investing

In Europe, a barrier that is gradually being overcome to allow more capital to flow into a wider array of infrastructure investments is a more common approach to definitions. Part of this work has been done through the adoption of the EU’s Sustainable Finance Disclosure Regulation (SFDR) for asset managers and other financial market participants. This was established to facilitate capital flow towards sustainable finance. SFDR requires asset managers and other financial market participants to provide transparency on sustainability and imposes mandatory ESG disclosure obligations. 

Implementation of the European Union’s Sustainable Finance Disclosure Regulation (SFDR) for asset managers and other financial market participants came into effect in March 2021.

However, interpretation and implementation of SFDR have proven to be challenging over the last two years.

With this in mind, the European Commission launched a consultation review of the progress that has been made to implement SFDR, commencing in September this year through to December. The purpose of the review is to identify how the regulations could be improved to enhance legal certainty, usability, and ability to tackle greenwashing.

The review comprises two separate elements:

  1. A public consultation – this includes approximately 32 substantive questions.
  2. A targeted consultation – this is directed at industry bodies and firms familiar with SFDR and the EU’s sustainable finance framework. It contains approximately 92 detailed substantive questions.

The public consultation covers two main topics: the current requirements of SFDR and the interaction with other sustainable finance legislation—e.g., the EU Corporate Sustainability Reporting Directive (CSRD), the taxonomy regime, the Benchmarks Regulation, and the regime introduced by the Markets in Financial Instruments Directive (MiFID II) and the Insurance Distribution Directive (IDD) on sustainability preferences. 

Overall, the focus of the public questionnaire is to determine how SFDR is working today and the issues firms have in implementing it.

The targeted consultation covers the same points as the public consultation and also includes the additional two topics:

  1. Potential changes to the disclosure requirements in the regime. Questions to ask in this area include:
    1. Is the SFDR the right place for including entity-level disclosures, given that other EU legislation requires entity-level disclosures (such as the transparency requirements on sustainability for businesses in the Corporate Sustainability Reporting Directive)?
    2. To what extent is there room for streamlining sustainability-related entity-level requirements across different pieces of EU legislation?
    3. Should the updated regime impose uniform disclosure requirements for all relevant financial products offered in the EU, regardless of their sustainability-related claims or any other consideration?
  2.  For developing an SFDR 2.0, the consultation is gathering views on the potential establishment of new categorization or a new labeling system for financial products. Two broad categories are suggested:
    1. Build on existing concepts. This first option suggests developing the distinction between Article 8 and 9 products and the existing concepts embedded in them (such as “sustainable investment” or “do no significant harm”). These existing concepts could be complemented by additional criteria that define the scope of each article more clearly.
    2. Develop new approaches to categorization. This second option suggests focusing on new approaches, such as the type of investment strategy with criteria that do not necessarily relate to the existing concepts. In such a scenario, concepts such as environmental/social characteristics or sustainable investment and the distinction between current Articles 8 and 9 of SFDR may disappear altogether from the transparency framework.


SFDR compliance has taken time for investment managers to interpret and implement, which has not been helped by further regulatory guidance and clarifications from the EU Commission and other environmental bodies. In some cases, this has led to managers having to change the categorization of their funds (e.g., downgrading Article 9 funds to Article 8).

Any changes that come about as a result of the EU Consultation will take time before coming into effect, and any that do will hopefully make the SFDR reporting process easier to interpret.

Additionally and in parallel, the FCA is expected to finalize its own product labeling regime in Q4 2023. It remains to be seen if this UK policy will align with EU regulations or will diverge.

How SS&C Can Help

SS&C offers a suite of comprehensive, modular real asset services to a diverse, global client base and has extensive experience supporting the needs of organizations that invest in and manage a broad range of infrastructure investments across the full spectrum of legal entity structures. We build, own and operate our own proprietary, advanced and scalable technology platforms, and also offer the flexibility to work in our clients’ systems.

SS&C can help firms manage all reporting aspects of their ESG investments. By partnering with leading third-party providers, SS&C offers extensive services and support in ESG data management, reporting and oversight. Together, we relieve you of the burden of data operations through a fully tailored and bespoke solution.

The end result is a tailored solution to meet the unique requirements of your business while providing scalability, access to expertise and transparency to your data. As a global firm, SS&C operates with a follow-the-sun processing model to leverage time-zone differences and offer responsive, consistent customer service capabilities in any time zone.

Download our "Navigating the New Frontier in Infrastructure Investing" whitepaper to learn more.


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