SFDR 2.0 – EU Commission Publishes Legislative Proposal To Review SFDR

Background

The SFDR was adopted on 27 November 2019 and has been in application since March 2021. Following a comprehensive assessment revealing market misuse of Article 8 and 9 classifications as de facto labels, excessively costly application of provisions considered unnecessary by market participants, and insufficient investor protection, the EC conducted consultations from September to December 2023 and gathered feedback through its call for evidence published on 2 May 2025, ultimately recognising that reform was necessary.

The legislative proposal to review the SFDR represents the current disclosure-based regime's evolution into a product categorisation system for financial products with minimum safeguards and a reduced scope of application.