The European Commission has launched a new call for evidence to gather feedback on its initiative to revise the Sustainable Finance Disclosure Regulation (SFDR). The objective is to enhance the regulation’s effectiveness and reduce the reporting and compliance burden on investors.

In force since 2021, the SFDR requires financial market participants—such as asset managers—to disclose how they integrate sustainability risks, consider adverse sustainability impacts, and communicate sustainability-related information for financial products. The regulation aims to channel private capital towards sustainable investments and support companies in leveraging transition opportunities.

This new consultation is part of a broader review of the SFDR initiated in 2023. The Commission noted that, while the regulation’s objectives are widely supported, feedback has highlighted implementation challenges. These include ambiguities in legal definitions, disclosure requirements that are sometimes seen as irrelevant or excessive, inconsistencies with other EU sustainable finance rules, and data availability gaps.

Concerns have also been raised about the use of SFDR’s Article 8 and 9 product categories as informal sustainability labels—potentially increasing the risk of greenwashing.

In response, the Commission’s review aims to:

• Clarify legal definitions and core concepts.
  
  
• Align the SFDR more closely with other EU sustainability policies.
  
  
• Simplify and prioritize disclosure requirements to focus on what investors need most.
  
  
• Examine the potential for a formal classification system for financial products making sustainability-related claims, based on their specific objectives (e.g., transition-focused, sustainability-focused, or ESG strategy-aligned).
  

The call for evidence is open until May 30, 2025, and the Commission plans to publish the revised SFDR framework in Q4 2025.

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