Global Trustee and Fiduciary Services Bite-Sized Issue 12 2025

10 QUICK LINKS COSTS & CHARGES CRYPTOASSETS FINTECH FSB IOSCO OPERATIONAL RESILIENCE SAVINGS AND INVESTMENT UNION SUSTAINABLE FINANCE/ESG T+1 ASIA PACIFIC EUROPE NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 12 | 2025 The Commission says the amended rules will result in simpler and more usable information for investors, enabling them to make better informed choices, also indicating that providers of financial products will see a reduction in disclosure requirements, enabling them to cut costs. Moreover, the Commission says that changes will facilitate an increased participation of retail investors in EU capital markets, in line with the objectives of the Savings and Investments Union (SIU) and help boost the flow of funds towards sustainable objectives. Key elements of the proposal a. Simplified disclosures The Commission proposes to delete entity-level disclosure requirements for Financial Market Participants (FMPs) regarding principal adverse impacts indicators. Its aim is to streamline corporate disclosures in the sustainable finance framework, addressing current overlaps between the Corporate Sustainability Reporting Directive (CSRD) and the SFDR. The Commission considers this to align with the Commission’s Omnibus I simplification package from February 2025 where it says that amendments will significantly reduce the implementation costs associated with the SFDR. The Commission proposes that in the future, only the largest FMPs subject to the updated thresholds under the CSRD will need to disclose their impacts on the environment and society. The Commission further states that removing entity-level disclosures from the SFDR significantly cuts reporting requirements and costs associated with collecting data across a wide range of environmental, social and governance (ESG) topics and removes duplications. The Commission is also proposing a significant reduction in product-level disclosures , limiting them to data that is available, comparable, and meaningful. Focused on the key criteria underpinning the proposed product categories (see point b. below), they say this will give providers more clarity and certainty on how to design and present the sustainability characteristics or objectives of their products, making themmore relevant and comparable for investors. The Commission also indicates that the revised disclosures will be more retail friendly, helping retail investors to quickly and easily understand the sustainability features of financial products. b. A clear categorisation system Based on a wide consensus in stakeholder feedback, the Commission is proposing a simple categorisation system for financial productsmaking ESG claims . It will comprise three categories with clear criteria, building on existing market practices that have been informed by the latest regulatory guidance. The Commission believes these categories will simplify the investment journey of retail investors and help themmake informed investment decisions. Broadly, the proposed categories will be: • ‘Sustainable’ : products contributing to sustainability goals (e.g. climate, environment or social goals), such as investments in companies or projects that are already meeting high sustainability standards; • ‘Transition’ : products channelling investments towards companies and/or projects that are not yet sustainable, but that are on a credible transition path, or investments that contribute toward improvements in e.g. climate, environment or social areas; • ‘ESG basics’ : other products that integrate a variety of ESG investment approaches but do not meet the criteria of the above-mentioned sustainable or transition investment categories (e.g. focusing on best-in-class performers on a given ESGmetric, pursuing financial returns while excluding the worst ESG performers). Categorised products would need to ensure that a high portion of investments (70% of the portfolio) supports the chosen sustainability strategy and exclude from all their portfolio investments in harmful industries and activities, for example companies in violation of human rights standards as well as those involved in tobacco, prohibited weapons and fossil fuels above certain limits. ESG claims in names and in marketing documentation will be reserved for categorised products – which the Commission says is a key step to fight greenwashing and boost trust in sustainable investments. The Commission proposal has now been submitted to Parliament and Council for their deliberation.