SFDR 2.0 – proposed revised EU Sustainable Finance Disclosure Regulation published
On 20 November 2025, the European Commission’s (“EC”) proposed amendments to the EU Sustainable Finance Disclosure Regulation (“SFDR”) were published (the “Proposed SFDR 2.0”).
This official version is substantially similar to the version that was leaked on 6 November 2025, which you can read more about here. The key differences between the leaked version and this official version are:
- removing the ‘professional investor opt-out’;
- principal adverse impacts (“PAIs”) making a slight return – these will remain relevant for the new Article 7 and 9 product categories, but, as per the leaked version, PAIs will no longer apply at an entity level or to the new Article 6 and 8 product categories;
- application of mandatory exclusions to all categories; and
- introducing a requirement for funds not applying the new product categories, but making limited sustainability-related disclosures, to make annual disclosures.
We provide a more holistic summary of the differences between the leaked version and this official version in this legal update, with more detailed analysis to follow.
Differences between the leaked and official versions of the Proposed SFDR 2.0
The key differences between the leaked version and the official version of the Proposed SFDR 2.0 include:
| Change | Leaked version | Official Version | |
|---|---|---|---|
| 1. | Amended scope | Investment advice and portfolio management removed from obligations. | Unaltered. |
| 2. | Removal of “sustainable investment” definition | To combat the current misaligned interpretations, similar concepts will instead be integrated into the proposed new product categories through concrete requirements (see row 6 below). | Unaltered. |
| 3. | Removal of principal of “do no significant harm” | Concept effectively replaced by minimum exclusions of specific activities / sectors (based on the criteria for low carbon benchmarks, in line with the current approach under the ESMA Guidelines on Fund Names). These are integrated into proposed new product categories (see row 6 below). | Unaltered. |
| 4. | Removal of entity-level principal adverse impact (“PAI”) disclosures | Entity-level disclosures removed entirely, and, as noted in row 3 above, the product-level use of the concept is replaced by minimum product-level exclusions that are aligned with the ESMA Guidelines on Fund Names. | The product-level use of the concept of PAIs has been re-instated in relation to the proposed new Article 7 and Article 9 product categories (see row 6 below). |
| 5. | Removal of entity-level remuneration policy disclosures | Entity-level disclosures removed. | Unaltered. |
| 6. | New “sustainability-related financial product” categories | Introductions of product categories in place of currently Article 8 and Article 9 disclosures:
The EC is empowered to specify further details of things such as investment criteria and the presentation of information via delegated acts. Interestingly, this system seems to make no allowance for “mixed” financial products, except to the extent they invest in other products that fall within the Article 7, 8 and/or 9 category (e.g. funds of funds). | The product categories are amended as follows:
(1) Exclude investments in companies that: (i) develop new projects for the exploration, extraction, distribution or refining of hard coal and lignite, oil fuels or gaseous fuels; or (ii) develop new projects for, or do not have a plan to phase-out from, the exploration, mining, extraction, distribution, refining or exploitation of hard coal or lignite for power generation; and (2) Identify and disclose the PAIs of their investments on sustainability factors, and explain any actions taken to address those impacts.
|
| 7. | Other products | Financial market participants (“FMPs”) are not prohibited from referring to information on sustainability aspects “of an ancillary nature” in regulatory disclosures for other products. But information should not be a prominent element of disclosures, and there are restrictions relating to naming and marketing communications. A new Article 6a has been introduced allowing for “voluntary” transparency for these products. But it does not seem to be suggested that there would be a mandated format for this. | The restrictions relating to naming and marketing communications have been supplemented to provide that:
In addition, FMPs that issue and disclose ESG ratings under the new EU ESG Ratings Regulation (which you can read more about here) must also make certain disclosures. |
| 8. | Disclosures | The new provisions in Articles 7, 8 and 9 empower the EC to specify that disclosures are presented in a particular way not exceeding two pages. This perhaps indicates that long and complex “pre-contractual disclosures” (“PCDs”) are being replaced with shorter discloses, potentially integrated into wider product disclosures. Otherwise, Article 10 “website disclosures” and Article 11 “periodic disclosures” are still required for in-scope products, albeit potentially in simplified form. | Substantially the same. |
| 9. | Impact investing recognised | Article 7 and Article 9 products can elect to use “impact” in their names, provided certain conditions are complied with. | Unaltered. |
| 10. | Treatment of sovereign debt | General purpose sovereign, sub-sovereign and supranational debt are excluded from counting towards the numerator for the thresholds of Article 7 and 9 products, but can be used for the thresholds for Article 8 products. Such debt with a known use of proceeds can be included in the numerator for all financial products.
| Substantially the same. |
| 11. | Use of data | New provisions have been inserted regarding use of data and estimates. These require FMPs to formalise and document their arrangements for using data and their methodologies for estimates. Certain information must be provided on request to clients. | Substantially the same. |
| 12. | Grandfathering | FMPs can choose to not apply the revised rules to closed-end type financial products that were created and distributed before the implementation of the revised rules. Otherwise, pre-existing products will need to comply with the new rules. | Unaltered. |
| 13. | Professional opt-out | FMPs can also choose not to apply the new product categories to AIFs made available exclusively to professional investors. It is somewhat unclear what restrictions such funds would be subject to in terms of sustainability disclosures, as for example certain restrictions on naming and marketing appear to apply to them, but the exact meaning of these restrictions is somewhat unclear. | This exemption has been removed. |
| 14. | EC, not the European Supervisory Authorities, to develop delegated acts | The EC will work on new level 2 rules relating to naming, criteria for product categories, and new simplified disclosure templates. | Substantially the same. |
| 15. | Removal of product level Taxonomy disclosures | The EC has proposed removing Articles 5-7 of the Taxonomy, which currently require additional information to be included in the PCDs for Article 8 and Article 9 SFDR-aligned products. | This provision has been removed, meaning that Articles 5-7 of the Taxonomy will remain intact. However, the EC is now proposing to repeal the current EU SFDR RTS. |
| 16. | Application | Whilst an application date is not yet written into the proposal, the implication of a 12 month transitional provision for IBIPs, pension products, pensions schemes and PEPPs seems to be that the changes would apply sooner for funds (which are not covered by the transitional provisions). | Unaltered. |
