Navigating SFDR 2.0: Unofficial Consolidated Text of the Commission’s Proposal

Following the European Commission’s proposal of 20 November 2025 to amend the Sustainable Finance Disclosure Regulation (SFDR), Stibbe has prepared a non-official consolidated version of SFDR 2.0 to assist all interested persons in navigating the proposed updated European Union (EU) sustainable finance legal framework.

What is SFDR 2.0?

SFDR 2.0 represents a comprehensive overhaul of the EU’s transparency framework for sustainable financial products, addressing key shortcomings identified since SFDR’s implementation in March 2021. 

The Commission’s proposal introduces three major improvements:

1. Simplified disclosures: SFDR 2.0 introduces streamlined requirements aimed at reducing complexity for both financial market participants and retail investors, with fewer indicators and more concise disclosure obligations.

2. New categorisation system: three new categories of financial products have been introduced to help investors better align their sustainability preferences with available investment options:

1. the “transition category” (or the future “Article 7 Financial Products”) – these new financial products category aims at channelling investments towards companies or projects that are not yet sustainable, but are on a credible transition path and contribute towards improvements in e.g. climate, environment or social areas;
2. the “ESG Basics category” (or the future “Article 8 Financial Products”) – these are financial products integrating various sustainability factors in their investment strategy going beyond sustainability risk considerations, but which do not meet the criteria of the sustainable or transition categories; and
3. the “sustainable category” (or the future “Article 9 Financial Products”) – these are financial products pursuing clear and measurable sustainability objectives (e.g. climate, environmental or social goals) through investments in companies or projects that already meet high sustainability standards.

3. Enhanced credibility: finally, in order to better combat greenwashing, financial products classified under one of the three categories above will need to ensure that a high portion of investments (70% of the portfolio) supports the chosen sustainability strategy and excludes investments in harmful industries and activities.

In a nutshell, the proposed reform aims to make sustainable finance disclosure requirements simpler, more efficient, and better aligned with market realities, whilst reducing compliance costs and strengthening investor protection.

Navigating the Changes

The SFDR 2.0 proposal will now be subject to trilogue negotiations between the European Parliament, the Council, and the European Commission. The final version of SFDR 2.0 may not be ready before 2027 and, according to the proposal, once adopted, SFDR 2.0 should apply 18 months after its entry into force, meaning that application may occur in 2028 or later.

Stibbe’s non-official consolidated version integrates the Commission’s proposed amendments with the existing SFDR text, providing a practical tool to help financial market participants, investors, and all other stakeholders better understand the evolving EU sustainable finance regulatory landscape and prepare for the changes ahead.

The SFDR 2.0 unofficial consolidated text is available here:

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Please note this is an unofficial document prepared for informational purposes only and does not constitute legal advice. Users should refer to the official Commission proposal for authoritative guidance. Please contact us should you require any further information.