SFDR 2.0 – What You Need To Know

Since it entered into force in 2021, the EU Sustainable Finance Disclosure Regulation ("SFDR 1.0") has been criticised for its shortcomings, in particular for operating as a de-facto labelling regime - rather than a disclosure regime as intended - and for requiring disclosures that are overly lengthy and complex, making it difficult for investors to understand and compare the environmental or social characteristics of financial products. On 20 November 2025, the European Commission (the "Commission") published its long-awaited official proposal for reform: SFDR 2.0, together with a press release and Q&A. The proposed amendments revise the disclosure framework and define the essential features of the new proposed sustainabilityrelated financial product categories and supervisory framework. The proposals also empower the Commission to develop a limited set of technical implementing rules to supplement these key elements. There is a long way to go in terms of