SFDR Real Estate Solutions Paper: Proposals for solving challenges arising from SFDR for real estate investments




Industry Paper

The SFDR’s objective is to promote transparency on environmental and social characteristics, and broader sustainability issues across financial markets. The SFDR should be supported in its ambition to accelerate decarbonisation of financial market activities, including the built environment, and to inhibit greenwashing.

However, there are challenges surrounding the application of SFDR to real estate which still need to be overcome. The SFDR Real Estate Solutions Paper proposes potential remedies for challenges surrounding:

  • Differences in the calculation methodologies between the TCFD’s recommendations and the SFDR
  • Inconsistencies with energy performance certificate (EPC) ratings among EEA member states
  • Confusion surrounding what should be included under the mandatory PAI “exposure to fossil fuels”
  • Treatment of energy inefficient assets under the PAI