Dear Commissioner Albuquerque,
\nDear Commissioner S\u00e9journ\u00e9,<\/p>\n<\/div>
The review of the SFDR (Sustainable Finance Disclosure Regulation), initiated two years ago, is coming to an end with the publication of the proposal for a revised regulation by the European Commission announced for Q4 2025.<\/p>\n
We are keen to see this regulation evolve significantly to \u201crestore trust in the market\u201d and stop \u201cbear[ing] significant greenwashing risks\u201d (1). We therefore call on the European Commission to respond to the expectations of EU citizens, retail investors, civil society, and financial stakeholders by offering sufficient safeguards to prevent greenwashing, notably by making the exclusion of companies developing new fossil fuel projects (2) a minimum criterion across all SFDR product categories (3).<\/p>\n
As pointed out by three separate national financial market supervisors, all SFDR categories should be \u201cbased on objective minimum criteria\u201d (4). A unique set of baseline exclusions is particularly necessary for the fossil fuel sector, as there is a broad scientific consensus on the need to halt the development of new fossil fuel projects to limit global warming to 1.5\u00b0C (5). President von der Leyen herself stated, when presenting the Draghi report: \u201cthe only way to ensure our long-term competitiveness is to shift away from fossil fuels and towards a clean, competitive, and circular economy.\u201d (6).<\/p>\n
Indeed, developing new fossil fuel projects – a long-term investment incompatible with global climate goals – is a clear indication that a company is not planning to transition. Oil and gas majors are currently raising their oil and gas production growth targets, maintaining the majority of their investments in fossil fuel development and only marginally investing in sustainable energy (7).<\/p>\n
Excluding companies developing new fossil fuel projects from all SFDR product categories aligns with citizens\u2019 and retail investors’ expectations (8). Over the years, several scandals have revealed the disconnect between the presence of such companies in funds that included sustainability messaging and the expectations of citizens and retail investors (9). As a result, national sustainable fund labels have been increasingly integrating related exclusions in order to remain credible (10).<\/p>\n
This easily understandable and implementable criteria (11) would significantly clarify the aims of the SFDR and help restore trust among retail investors, in line with the feedback received by the Commission in the September 2023 \u201cTargeted Consultations on the SFDR Assessment\u201d (12).<\/p>\n
Simply aligning the SFDR\u2019s minimum criteria with the recent ESMA Guidelines on fund names (13) or replicating the criteria of the Climate Benchmark Regulation is clearly insufficient to guarantee credibility. We highlight that the current Climate Transition Benchmark (CTB) does not include any fossil fuel exclusions, and we advocate strongly for a strict exclusion of companies developing new fossil fuel projects to serve as reference for all future SFDR categories (14).<\/p>\n
Given the elements above, we, the signatories of this letter, call on you to ensure the exclusion of companies developing new fossil fuel projects from all future SFDR fund categories.<\/p>\n
Yours sincerely,<\/p>\n<\/div>
Signatories:<\/p>\n<\/div>