Increased demand for qualified counselors is necessary.
The European Union (EU) is actively refining its regulatory framework for sustainable investments, aiming to enhance transparency, due diligence, and the integration of sustainability risks within financial markets.
Key regulatory updates include the Sustainable Finance Disclosure Regulation (SFDR), Corporate Sustainability Reporting Directive (CSRD), and Corporate Sustainability Due Diligence Directive (CSDDD). The SFDR, enforced by the European Securities and Markets Authority (ESMA), requires providers to disclose concrete information on sustainability since March 2021.
The CSRD and CSDDD, currently undergoing negotiations, will see updated thresholds and deadlines. For instance, the CSRD's implementation is delayed, increasing thresholds for companies in its scope, while the CSDDD's implementation is pushed back to July 2028. These changes aim to focus reporting requirements on larger entities and simplify compliance.
However, these frameworks are undergoing refinement to balance regulatory ambition with economic realities. Negotiations continue into late 2025 to finalize these standards fully.
More than 150 businesses and investors recently urged policymakers to preserve core components of these sustainability frameworks, arguing that strong and stable rules under CSRD and CSDDD are vital for directing capital flows towards sustainable innovation and ensuring competitiveness and long-term value creation.
Despite these efforts, sustainable investments make up only 8% of the total fund market. Among high net worth individuals, 22.9% have made ESG investments, while 56.7% have no plans or are unsure. The general population's participation in ESG investments is lower, with only 14.9% investing, and 62.9% undecided or unwilling.
The lack of uniform regulation defining the criteria for a sustainable investment and varying perceptions and goals among investors present challenges. Advisors are encouraged to ask investors about their preferences for ecological, social, and corporate governance aspects in their investments.
Providers may label their investments as "sustainable", "green", or ESG-compliant without aligning with investors' understanding, emphasizing the need for advisors to provide potential investors with more comprehensive information about sustainable investments.
Sustainable investment strategies can vary, including excluding certain sectors or companies, or only including industry leaders in sustainability. The more resource-intensive approach to sustainable investments results in a higher-quality portfolio with fewer sustainability risks.
As the EU continues to develop its sustainable finance agenda, enhancing supervisory consistency across member states and improving the integration of sustainability risks remain key challenges. The introduction of an eco-label for sustainable financial products, though unclear, could provide clarity and boost public participation in sustainable investments.
[1] European Securities and Markets Authority. (2025). Final report on supervisory action reviewing authorized managers' compliance with sustainability risk integration and disclosure requirements under SFDR and related EU legislation. [2] European Parliament and Council of the European Union. (2025). Proposed amendments to the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). [3] Investor Group on Climate Change. (2025). Joint statement on the importance of the EU's sustainability directives. [4] European Commission. (2025). Proposed amendments to the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD).
The European Securities and Markets Authority (ESMA) requires providers to disclose concrete information on sustainability as part of the Sustainable Finance Disclosure Regulation (SFDR). [1]
To direct capital flows towards sustainable innovation, more than 150 businesses and investors recently urged policymakers to preserve core components of the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). [3]
As the EU continues to develop its sustainable finance agenda, sustainable investment strategies like excluding certain sectors or companies and only including industry leaders in sustainability can lead to a higher-quality portfolio with fewer sustainability risks. [4]
