SFDR 2: Paving the way for a credible and coherent EU financial market

Reclaim Finance advocates for a revised SFDR framework (SFDR 2) to address confusion and greenwashing caused by the original 2019 regulation. The organization supports the exclusion of fossil fuel developers from sustainable and transition categories, calls for clearer criteria for 'transition' assets, and identifies inconsistencies in the European Commission's proposal regarding reporting obligations and fund claims.

• The original SFDR framework, specifically articles 8 and 9, failed to provide value for retail investors due to complexity and a lack of minimum safeguards, which contributed to several scandals and investor confusion.
• Excluding fossil fuel developers from 'sustainable' and 'transition' categories is viewed as a necessary measure to prevent greenwashing and restore investor confidence, particularly as a way to close loopholes in ESMA Guidelines on fund names.
• The European Commission's proposal for the 'transition' category is criticized for vagueness regarding the criteria used to meet the 70% asset threshold, which could allow for diverse practices with varying climate impacts.
• Reclaim Finance identifies three specific inconsistencies in the Commission's proposal: allowing claims on funds that do not meet category criteria, exempting non-categorized funds from reporting 'principle adverse impacts' (PAIs), and hindering Member States' ability to keep existing transparency rules.

APA

Manickawasagar, A. (2025). SFDR 2: Paving the way for a credible and coherent EU financial market. Reclaim Finance. https://reclaimfinance.org/site/en/2025/12/02/sfdr-2-paving-the-way-for-a-credible-and-coherent-eu-financial-market/

Chicago

Manickawasagar, Aatiraï. SFDR 2: Paving the way for a credible and coherent EU financial market. Reclaim Finance, 2025. https://reclaimfinance.org/site/en/2025/12/02/sfdr-2-paving-the-way-for-a-credible-and-coherent-eu-financial-market/.

Wikipedia

{{cite press release |last1=Manickawasagar |first1=Aatiraï |title=SFDR 2: Paving the way for a credible and coherent EU financial market |publisher=Reclaim Finance |date=2 December 2025 |url=https://reclaimfinance.org/site/en/2025/12/02/sfdr-2-paving-the-way-for-a-credible-and-coherent-eu-financial-market/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{manickawasagar2025sfdr, author = {Manickawasagar, Aatiraï}, title = {{SFDR 2: Paving the way for a credible and coherent EU financial market}}, publisher = {Reclaim Finance}, year = {2025}, month = dec, url = {https://reclaimfinance.org/site/en/2025/12/02/sfdr-2-paving-the-way-for-a-credible-and-coherent-eu-financial-market/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }