The Sustainable Finance Disclosure Regulation (SFDR) was introduced to enhance transparency and improve sustainability disclosures by financial market participants. It has been instrumental in raising awareness of the negative impacts of investments on people and the planet but has not yet succeeded in fully delivering on its intended goals.

In new research, we analyse the quality of engagement and due diligence disclosures by 30 asset managers operating in the EU and how they meet SFDR's regulatory requirements, given the importance of engagement in mitigating harm caused by investee companies. Our report highlights leading practices, demonstrating that better disclosures are feasible, alongside evidence of where asset managers still fall short of providing instructive information.

Based on our findings and current market practices, we set out policy recommendations to inform the SFDR review, focusing on upholding entity-level engagement disclosures and introducing engagement disclosure requirements across new product categories.