Eurosif position on the review of the SFDR

The Sustainable Finance Disclosure Regulation (SFDR) is a core part of the EU sustainable finance framework. Its implementation has improved transparency on sustainability considerations in financial markets. However, while the SFDR was initially designed as a disclosure-based regime, it was implemented by the markets as a de facto product classification system. This led to implementation challenges and inconsistent interpretations.

The SFDR review is an opportunity to fix these challenges. A clearer, more robust framework will further prevent greenwashing and help mobilise capital for transition to a sustainable, competitive and prosperous economy, in line with the EU Savings and Investment Union objectives.

The European Commission’s proposal of 20 November 2025 provides a good  foundation for meaningful reform.

We welcome:

• A shift to a structured product categorisation system supported by minimum criteria, bringing greater clarity and comparability.
• Explicit recognition of impact investing, acknowledging its distinct role in driving measurable environmental and social outcomes.
• Exclusion of companies with fossil fuel expansion plans or without coal phase-out plans from “sustainable” and “transition” products, reinforcing credibility and ambition.
• Clear rules linking the use of sustainability-related names and marketing communications to compliance with SFDR criteria, preventing misleading claims.
• Tailored treatment for use-of-proceeds instruments, including European Green Bonds, and for products that combine other products (e.g. funds-of-funds), better reflecting how sustainability approaches are implemented in practice.
• Simplified website disclosures and greater clarity on the use of data and estimates, improving usability and transparency for end investors.

Areas for improvement:

Recommendation 1: Establish clear, practical and robust criteria tailored to different asset classes across SFDR categories to ensure sufficient ambition and prevent greenwashing.
Criteria must be sufficiently clear, ambitious and operational to prevent greenwashing while remaining workable across diverse investment strategies and asset classes.

Recommendation 2: Ensure SFDR category- specific criteria are consistent with their objectives and features.
Each category’s criteria should reflect its purpose, with consistent requirements that reinforce its distinct role within the framework.

Recommendation 3: Retain meaningful entity-level disclosures and recalibrate product-level disclosures to ensure transparency for end investors and market supervisors.
The European Commission’s proposal removes many disclosures that are relevant for both retail and institutional investors as well as market supervisors.  These disclosures should be retained and streamlined to provide relevant, decision-useful information for end investors while supporting effective supervisory oversight.

Recommendation 4: Achieve coherent implementation and consistency with other EU rules.
Implementation must be well-sequenced and consistent with related EU sustainable finance rules to avoid duplication, contradictions, and unnecessary complexity.

A well-calibrated SFDR is essential to maintaining the EU’s leadership in sustainable finance. With targeted improvements, the revised framework can enhance market integrity, support the real-economy transition, and deliver clear, reliable information to investors.

 

Read the position here.