The review process of the Sustainable Finance Disclosure Regulation (SFDR 2.0) is progressing at a rapid pace at the community level. After establishing their respective positions, the Council of the European Union and the European Parliament have continued trilogue negotiations with new rounds of meetings scheduled for this November, aiming to reach a political consensus by the end of 2026 or the beginning of 2027.
This deep regulatory overhaul aims to correct the deficiencies of the current framework, transforming the well-known Articles 8 and 9 into a clearer, more intuitive, and standardised product categorisation system for investors. Among the main points of friction and debate that negotiators must refine is the exact definition of thresholds for sustainability and transition categories—including the treatment of certain investments in sectors such as fossil fuels under strict decarbonisation plans—as well as the necessary consistency and coordination with other financial market regulations such as MiFID II and PRIIPs.
The European financial sector is eagerly awaiting the outcome of these discussions. Although the future regulation will include a transition period of several months for its practical application once finally approved, experts remind that the new framework will require asset managers and entities to rethink their product ranges, simplify information templates, and strengthen internal controls to ensure total transparency and avoid any risk of bureaucratic overreach or greenwashing.
