Securities Industry and Financial Markets Association (SIFMA)

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Washington DC, United States
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The Securities Industry and Financial Markets Association (SIFMA) appears to have had mixed engagement with regard to sustainable finance policy, operating primarily in the United States with some advocacy in the EU and UK.

SIFMA has stated support for the role of finance in achieving the goals of the Paris Agreement but has emphasized that private-sector innovation and real economy policies should be the primary means of transitioning to a low-carbon economy.

SIFMA appears to have a mixed position on regulated corporate ESG disclosure. In a 2020 white paper SIFMA appeared to support the development of climate-related disclosure frameworks in line with TCFD recommendations, and in a 2020 blog post CEO Kenneth Bentsen called for mandatory disclosure of “corporate-specific, financially material, decision-relevant data relating to climate risks and opportunities.” In a 2021 letter to the SEC, SIFMA appeared to support the need for regulated corporate ESG disclosure informed by the TCFD and other regulatory bodies, albeit with a phased-in approach. However, in a 2021 response to a TCFD consultation SIFMA pushed back on the idea of mandating forward-looking climate-related financial metrics. Additionally, after the SEC released its proposed climate disclosure rule in 2022, CEO Kenneth Bentsen expressed concern with some aspects of the proposal including Scope 3 disclosures, “limited” safe harbors, and implementation timelines.

SIFMA has recommended that global policymakers reach a common definition of sustainable finance that can then be translated into “sector and region-specific taxonomies,” but in 2020 stated opposition to the expansion of the EU taxonomy to environmentally harmful activities, cautioning that such a designation could risk stranded assets.

SIFMA has taken mixed positions on policy on ESG labels and standards. In feedback to the European Commission on the Renewed Sustainable Finance Strategy in 2020, SIFMA cautioned against new ESG labels for investment funds and mandatory implementation of ESG benchmarks. In 2022 comments to the UK Financial Conduct Authority (FCA) on investment labels, SIFMA advocated for increased ambition for some standards and asked for the removal and watering down of other criteria.

SIFMA appears to have taken mixed positions on the incorporation of ESG factors into investor duties. In comments to the European Supervisory Authorities in 2020 SIFMA argued for less restrictive ESG disclosure requirements, and in comments on the European Commission’s renewed sustainable finance strategy SIFMA opposed adopting rules that would require fiduciaries to consider the adverse impacts of investment decisions on the environment and sustainability. In comments to the FCA in 2022, SIFMA did not support a requirement for investment advisors to consider sustainability in investment advice and decision making, and in comments to ESMA also in 2022, SIFMA took issue with some of the guidelines on certain aspects of the MiFID suitability requirements, emphasizing that sustainability considerations should be of secondary importance.

However, SIFMA opposed both of the Department of Labor rules that sought to limit shareholder rights and ESG investing, arguing that ESG considerations are important when evaluating long-term investments, and voiced support for a bill that would solidify the legal ability of workplace retirement plans to consider ESG factors in their investment decisions. In 2021, when the Department of Labor proposed a rule that sought to overturn Trump-era rulemaking on ESG investing, SIFMA issued a press release in support of the Department’s actions. However, in its comments on the rule, SIFMA asked the Department to alter and remove references to ESG considerations in the rule language.

SIFMA appears to support the development of climate risk frameworks but has stated opposition to the use of prudential regulation for ESG issues and has cautioned against risk metrics that result in a list of environmentally harmful sectors or clients. In comments to the Office of the Comptroller of the Currency in 2022, SIFMA welcomed efforts to establish supervisory guidance on managing climate risks, but advocated for a flexible approach and emphasized data challenges.

SIFMA has the comment letters it has sent to policymakers and regulators easily accessible on its website. SIFMA is transparent about its membership, highlighting the companies and individuals that hold key positions on the executive board alongside a list of general membership.

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