Revising the SFDR: Key features of the new framework

The European Commission has proposed a substantial reform of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector, commonly referred to as the Sustainable Finance Disclosure Regulation or SFDR, together with related amendments to Regulation (EU) 1286/2014 on key information documents for packaged retail and insurance-based investment products. The proposal would also repeal the Commission Delegated Regulation (EU) 2022/1288, which currently contains the detailed SFDR regulatory technical standards for SFDR disclosures.

The proposed framework is intended to address three recurring weaknesses in the existing regime: excessive complexity, limited usefulness for end investors and inconsistent market practice. It seeks to do so by replacing the current market reliance on Article 8 and Article 9 classifications with three formal product categories, namely Transition, ESG Basics and Sustainable, supported by minimum criteria, controlled use of sustainability-related terminology and simplified disclosures.

For firms, the proposal would change how sustainability-related products are designed, named, marketed, documented and monitored. Product categorisation, data governance, evidence for sustainability claims and the alignment between investment strategy and marketing language would become central compliance issues if the proposal is adopted.

Download the full briefing for a clear overview of the proposed SFDR 2.0 framework, its practical impact for financial products and a comparative table on national supervisory guidance, investigations and sanctions across Austria, Belgium, Denmark, Finland, France, Germany, the Netherlands, Norway, Portugal, Spain and Sweden.