The European Commission (EC) is proposing SFDR 2.0 to: simplify disclosure in sustainable finance; replace the de facto labels of Articles 8 and 9 with three voluntary product categories – sustainable, transition and ESG basic categories – with the need for a 70% of the portfolio to be aligned with the relevant product strategy; and impose investment exclusions to strengthen integrity and combat greenwashing.
Entity-level disclosures are eliminated, templates are simplified, and comparability is improved by relying on CSRD/ESRS, with clear interaction with MiFID II/IDD and PRIIPs to facilitate retail distribution. SFDR 2.0 is expected 18 months after its approval and publication, with operational impacts for managers and greater investor protection in line with the objectives of the EU competitiveness strategy to promote a deeper and more integrated European single market.
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