The European Union’s current sustainable financial disclosure rules are hindering business practices, says ACCA.
The association stressed it is imperative that the European Commission simplifies the requirements and reduces the reporting burden for companies.
ACCA calls on the EC to address key issues in the regulation including:
- The requirement to gather large volumes of data which put a strain on asset managers’ budgets and leads to financial products being deprioritised by investors;
- Lack of enforcement which has led to concerns that some assets manager may not fully comply with the regulations, ACCA wants to see enforcement mechanisms introduced;
- The Sustainable Finance Disclosure Regulation’s (SFDR) applicability to large assets managers means that smaller firm with limited resources to comply with the requirements are locked out;
- The focus of the regulation is unbalanced with greater emphasis placed on social factors. More guidance on how to assess and address social impacts in investment strategies and consider how social elements can be further incorporated;
- The ‘do no significant harm’ test is not clear enough. Regulations need to clarify that financial performance in the short term should not be prioritised over the non-financial performance and risks to society in the long-term.
