Myth busting 2: Corporate Social Responsibility Directive (CSRD) vs Sustainable Finance Disclosure Regulation (SFDR)

There’s a common misconception that the Corporate Sustainability Reporting Directive (CSRD) and the Sustainable Finance Disclosure Regulation (SFDR) are interchangeable or always need to be discussed together. While both regulations aim to enhance transparency and sustainability in business practices, they serve distinct purposes and target different audiences. The CSRD focuses on corporate sustainability reporting, applying to a broad range of companies across sectors. On the other hand, the SFDR is specific to financial market participants and advisers (Figure 1), ensuring transparency in how sustainability risks are considered in financial products. Although they complement each other in the EU’s broader sustainability agenda, their scopes and requirements do not inherently overlap, and one does not automatically necessitate mention of the other. There is never enough myth-busting. Therefore, in this article, I will explain what you need to know about the Sustainable Finance Disclo…