Asset Management & Investment Funds: EU & International Developments – May 2025

European Commission call for evidence on revising the SFDR

On 2 May 2025, the European Commission (Commission) published a call for evidence (CfE) to support an impact assessment as part of its ongoing review of the functioning of the Sustainable Finance Disclosure Regulation (SFDR).

In the CfE, the Commission highlights several shortcomings in the current SFDR framework, as identified through extensive feedback gathered during its comprehensive assessment initiated in 2023. This assessment included two consultations (one public and one targeted), technical workshops with industry and engagement with Member States, supervisors, and civil society representatives (read our publication here). According to the Commission, while many stakeholders acknowledge that the SFDR has enhanced transparency and provided investors access to detailed ESG information, they also report that implementation is complex and costly.

While noting continued widespread support for both the broad objectives of the SFDR and of the value of a common sustainability disclosure framework at EU level, the Commission observes that a significant majority of stakeholders identified limitations in the SFDR which prevented the objectives of the framework from being fully achieved. These include:

• a lack of clarity on key concepts
• limited relevance of certain disclosure requirements
• overlaps and inconsistencies with other parts of the sustainable finance framework
• data availability challenges

It notes that these limitations have led to various implementation challenges and undue operational costs for financial market participants as well as a lack of clarity and comparability regarding the sustainability of different financial products available to EU investors. Consequently, these challenges have given rise to greenwashing risk and the unwarranted exclusion of some sectors due to the practical application of some rules. The Commission notes that these factors have reduced the effectiveness of SFDR mobilising private investment toward sustainable business practices and advancing Europe’s strategic objectives.

The Commission has outlined several key areas of focus for the review:

• simplifying key concepts
• streamlining and reducing disclosure requirements to focus on the most essential information for investors
• assessing the potential for categorising financial products that make sustainability-related claims. Any new categories should be easily understandable for retail investors, reflect a range of sustainability objectives aligned with EU goals, and take into account current market practices and available data

The Commission identifies two main options for a revised SFDR:

• targeted changes and clarification to existing disclosure requirements
• more comprehensive reforms, involving the introduction of distinct categories for financial products based on their sustainability objectives, supported by common criteria (for example, products contributing to a sustainability objective, products contributing to the transition, or products contributing to other ESG strategies)

Next steps

The feedback period runs until 30 May 2025. The Commission will consider stakeholder feedback as part of its planned revision of SFDR, as set out in its work programme, with delivery of its legislative proposal expected in Q4 2025. We expect this review to align with the Commission’s broader proposals to simplify sustainability reporting for companies.

Savings and investments union call for evidence

The Commission published a CfE on fostering integration, scale and efficient supervision in the single market as part of its savings and investments union (SIU) strategy. The deadline for responses is 5 June 2025.

Harmonised supervision is one of the objectives of the SIU. The Commission's aim is that all financial market operators should receive the same supervisory treatment irrespective of their location in the EU. It intends to propose a directive in Q4 2025 on measures concerning market infrastructure, the cross-border provision of funds and reduction of operational barriers for asset managers, and efficient supervision in the single market.

The call for evidence aims to gather the views and experience of stakeholders to:

• identify the barriers that prevent the EU's trading and post-trading infrastructures from reaping the benefits of a truly frictionless single market
• examine whether the current regulatory and supervisory setting is fit for the capital markets and, in particular, for market operators with strong cross-border activities or operating in new or emerging sectors
• review the toolbox of the European Supervisory Authorities (ESAs) to assess areas where their effectiveness and efficiency can be strengthened and improved

The Commission’s earlier 92-page consultation on the SIU (discussed in our April bulletin) closes on 10 June.

Update to PRIIPs KID Q&As

On 5 May 2025, the Joint Committee of the ESAs published an updated version of its Q&As on the PRIIPs Key Information Document (KID).

 The updates relate to

• market risk assessment and, in particular, market risk measure class determination (new question 9 in section III B)
• performance scenarios (new questions 24, 25, 26 in section IV)
• calculation of summary cost indicators (new question 6 in section XIII E)

The Q&As were last updated in June 2024.

T+1 progress report

The EU T+1 coordination committee published a summary of conclusions setting out progress towards T+1. 11 October 2027 has been proposed as the appropriate date for the transition to T+1 settlement.

CSDR change - Council is expected to reach an agreed position on the necessary legislative process soon with a focus on:

• a possible exemption for securities financing transactions 
• a possible suspension of cash penalties around the move to T+1

ESMA

• held a consultation on amendments to the RTS on settlement discipline
• work is ongoing on technical advice on cash penalties (expected to be submitted for approval to the ESMA board of supervisors in June 2025)

ECB update - particularly from the dedicated T+1 task force set up under the T2S governance in January 2025 (the T2S T+1 TF):

• the T2S governance to identify and launch the assessment for any T2S change requests in Q3 2025
• the T2S T+1 TF prepared preliminary considerations regarding the perimeter of possible T2S adaptations, expected to be shared with the T+1 Industry Committee by end April 2025
• work focused on possible changes to the T2S Night-Time Settlement, based on evidence through external data points across trading, clearing and settlement activities and internal data points

Technical workstreams (TW) update: no substantial roadblock to delivery of the final report by end of June has been identified so far.

Updated 2025 work plan:

• 15 May: TWs to finalise draft recommendations
• 30 June: publication of finalised implementation roadmap report
• Summer: public consultation
• September - December: T+1 implementation playbook and T+1 Q&As

ESMA advice on the Listing Act

ESMA published a advice to the Commission to support the Listing Act's goals to simplify listing requirements, enhance access to public capital markets for EU companies, and improve market integrity.

In relation to Market Abuse Regulation, the advice covers:

• protracted processes, identifying key moments for public disclosure
• delayed public disclosure, listing situations where delays are not allowed
• Cross-Market Order Book Mechanism, indicating the methodology for the identification of trading venues with significant cross-border activity

In relation to the Market in Financial Instruments Directive (MiFID), ESMA focuses on the review of the requirements for multilateral trading facilities and segments for the purpose of registration as an SME growth market.

The Commission will adopt the delegated acts, for which the technical advice was requested, by July 2026.

For more information on these topics please contact any member of A&L Goodbody's Asset Management & Investment Funds team.