The Association of Chartered Certified Accountants (ACCA) has called on the European Commission (EC) to simplify the Sustainable Finance Disclosure Regulation (SFDR) and alleviate its reporting burdens.
The organisation highlighted that the complexity of the regulation is hindering businesses’ sustainability initiatives.
Streamlined requirements, the association argued, are essential for effective implementation and to attract private investment for a sustainable future.
While supporting the goals of the SFDR, the association advocated for a transition-focused approach that offers more flexibility and phases in the implementation.
ACCA EEMA Public Affairs regional head Vikas Aggarwal said: “At present, the SFDR requirements are too granular and complex. These constraints will prevent the SFDR’s aims and EC’s objectives being fully achieved.”
The SFDR aims to set a high standard for transparency, accountability, and the integration of Environmental, Social, and Governance (ESG) considerations in investment decisions.
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By GlobalDataHowever, ACCA has identified key areas within the regulation that require attention from the EC.
The organisation highlighted the challenges faced by asset managers due to the extensive data requirements, which strain budgets and may lead to investors deprioritising financial products.
Furthermore, ACCA pointed out the lack of enforcement mechanisms, which raises concerns about full compliance with the regulations.
Smaller firms, in particular, find it difficult to meet the demands of the SFDR due to limited resources.
ACCA also noted an imbalance in the regulation’s focus, with a need for more guidance on assessing and addressing social impacts in investment strategies.
The “do no significant harm” principle requires further clarification to ensure that short-term financial performance does not overshadow long-term societal risks and non-financial performance, it said.
ACCA EEMA & UK Policy and Insights regional lead Joe Fitzsimons said: “EC was a first mover in establishing SFDR to combat greenwashing and is now looking to address undue burdens by simplifying and streamlining the requirements.
“We encourage the EC to use this first mover advantage and revisions process as an opportunity to influence wider global regulations.”
In April 2025, the ACCA called on the Financial Reporting Council (FRC) to ensure that audit requirements for SMEs in the UK remain proportionate and aligned with international standards.
