The European Commission has announced a delay in revising the Sustainable Finance Disclosure Regulation (SFDR) until Q4 2025, alongside further details on its Omnibus package.

In its 2025 Work Programme, the Commission confirmed that the SFDR revision would be postponed until Q4 2025 as part of its broader ‘simplification’ agenda.

Meanwhile, the Commission reaffirmed its commitment to the Omnibus package, which aims to streamline sustainability reporting, due diligence, and taxonomy. It also proposes a new category for small mid-caps with tailored requirements. Additional measures are intended to support the implementation of the InvestEU programme and the European Fund for Strategic Investments by simplifying reporting and encouraging investment.

European Commission President Ursula von der Leyen stated: “Citizens and businesses have called for a simpler EU that delivers prosperity. This work programme is our answer. We’ve heard you, we’re simplifying, and we will deliver. This roadmap charts our course to a more competitive, resilient, and growth-oriented Europe.”

Consultation Input and Industry Feedback

The delay comes as no surprise, given ongoing debates and differing perspectives.

In December, the EU Platform on Sustainable Finance released a briefing note proposing a product categorisation scheme for SFDR. According to law firm Linklaters, this was viewed as “an indicative direction” the Commission may take. The proposal suggests classifying financial products into three sustainability strategies: Sustainable, Transition, and ESG Collection. Each category would need to meet specific minimum exclusion criteria and ensure a certain percentage of its portfolio aligns with ESG standards. Products that do not fit these categories would be classified as ‘unclassified products.’

Separately, the European Fund and Asset Management Association (EFAMA) has emphasized the need for harmonized definitions and reporting requirements across EU legislation to ensure the success of the Omnibus package. EFAMA argues that alignment is crucial across SFDR, the Corporate Sustainability Due Diligence Directive (CSDDD), and the Corporate Sustainability Reporting Directive (CSRD).

EFAMA also highlighted the challenges asset managers face regarding sustainability reporting. As both preparers of CSRD reports and users of CSRD data for investment decisions, they rely on corporate sustainability disclosures to comply with SFDR. Without standardized CSRD data, asset managers are increasingly dependent on costly third-party ESG data providers.

Additionally, EFAMA has called for urgent clarification that asset managers are not required to include clients’ assets in their own CSRD reporting. While the CSRD text excludes fund products (such as UCITS funds and AIFs) from reporting obligations, it remains unclear whether clients’ investments—which are not part of an asset manager’s balance sheet—should be considered part of its ‘value chain.’

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