Committee on Economic and Monetary Affairs publishes amendments to SFDR 2.0 proposal

Background

On 20 November 2025, the EU Commission published its legislative proposal to amend Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (SFDR), often referred to as “SFDR 2.0”. The proposed changes aim to provide investors with clearer, more decision-useful information, while streamlining disclosure requirements and reducing compliance costs for financial market participants (for more details, read our newsflash here).

The proposal has also been met with feedback from industry stakeholders, who broadly welcomed the simplification efforts but raised concerns around the calibration of certain thresholds and requirements, the scope of disclosure and data availability.

With this feedback in mind, on 28 April 2026, the ECON published its draft report on the SFDR 2.0 proposal, setting out a series of amendments to the EU Commission’s initial text.

Key takeaways

The draft report highlights several amendments:

• The general application date of SFDR 2.0 moves from 18 to 24 months after entry into force.
• The EU Commission is called upon, in its review in line with Article 52 of the ESG Ratings Regulation, to consider extending its scope to providers of ESG data to ensure minimum standards on transparency, data quality, methodology disclosure and fair commercial practices.
• Manufacturers of packaged retail and insurance-based investment products (PRIIPS) are considered financial market participants.
• A set of mandatory principal adverse impact (PAI) indicators is required across all 3 categories.  
• A mandatory engagement strategy disclosure across all 3 categories is required.
• Removal of safe harbours for EU climate transition benchmarks (Transition category) and EU Paris-aligned benchmarks (Sustainable category).
• Taxonomy-aligned investment threshold is raised from 15% to 20% for both the Transition and Sustainable categories.
• Strengthened ESG basics screening requirements: investments must outperform the average rating or sustainability indicator of the universe/benchmark after eliminating at least 20% of the lowest-rated securities.
• A disclaimer for non-categorised products is required in the precontractual and periodic disclosures, clarifying that these products do not meet the EU standards for defining sustainable financial products and protecting against greenwashing.

Next steps

• Following the publication of the ECON draft report, Members of the EU Parliament will negotiate the amendments.
• The report will subsequently be submitted to a plenary vote of the EU Parliament to establish its negotiating position.
• Negotiations between the EU Parliament, the Council of the EU and the EU Commission will then take place to agree on the final text.
• Once adopted and published, the regulation will enter into force, followed by the development of delegated acts specifying detailed disclosure requirements (Level 2).
• Based on the current timeline, SFDR 2.0 is not expected to come into force before end of 2028 or even 2029.