ShareAction welcomes the provisional agreement between the Commission, Parliament, and Council on the Disclosure Regulation, one of the three legislative proposals released last May following the Commission’s Action Plan for Financing Sustainable Growth. The legislation creates new requirements to increase transparency of sustainability risks and impacts at portfolio and product level, and also requires disclosure of the processes in place to assess them.

In response, Eleni Choidas, European Policy Manager at ShareAction, said: “Disclosure of both sustainability risks and impacts is a key part of investors’ duties to their clients, the millions of ordinary European savers whose money funds European capital markets. This legislation produces a harmonized framework to be used by investors in this regard, and we are pleased that policy-makers have now agreed on a text to ensure these ordinary savers and the public have the information to ensure they fully understand the products and portfolios offered to them. Nonetheless, the quality and availability of this information is really dependent on requiring companies to produce non-financial information. A review of the Non-Financial Reporting Directive in the next Commission mandate would be a key way to achieve that, and will ensure the Disclosure Regulation reaches its intended impact.

“This legislation has gone through many forms since we first started working on it almost a year ago. We are pleased to see that the Commission’s original proposal has been expanded to include mention of the impacts of investment activities on communities and the environment, instead of being limited to the financially material risks on the performance of products and portfolios. We are encouraged by the provisions to ensure these requirements eventually become mandatory for financial market participants of a certain size and believe more guidance is needed in order to best operationalise the comply-or-explain principle present in this legislation. Comply-or-explain must be a meaningful tool to promote a level-playing field in disclosures, not an alternative for non-compliance, and we would encourage the Commission and ESAs to release further guidance on its usage for the purposes of this Regulation. Finally, our daily work with investors shows that more detailed disclosures on company engagement and shareholder voting are a crucial tool in promoting the goals of sustainable finance. We are pleased that there is mention of the need to disclose engagement, but believe clearer requirements are necessary to ensure the disclosure of contentious voting, as well as the results of wider engagement activities between investors and companies”.

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