Following a 2023 consultation that identified shortcomings in the original Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (SFDR), including complexity and the misuse of Articles 8 and 9 as product labels, the European Commission has proposed a comprehensive revision, known as “SFDR 2.0”.
The proposal aims to simplify the rules, com-bat greenwashing, and improve investor understanding by shifting from a disclosure-based approach to a formal product categorization system. This briefing outlines the key changes introduced by the SFDR 2.0 proposal.
Key changes include:
- New Product Categories: Introduces three new categories (“Transition”, “ESG Basics” and “Sustainable”) to replace the current Articles 8 and 9 framework.
- Minimum Thresholds: Requires products in each category to meet a 70% threshold for qualifying investments.
- Strict Exclusions: Mandates specific exclusions for each product category (e.g., fossil fuels, controversial weapons).
- Naming and Marketing Rules: Restricts the use of sustainability-related terms in product names and marketing to categorized products.
