SFDR 2.0 Trilogues: Where do the co-legislators stand?

Trilogue negotiations on the SFDR review are due to start on 22 October and envisioned to finish by the end of 2026.

Parliament's text is the strongest of the three on most issues. Its main weakness is ESG Basics: retail investors receive a single indicator on fossil fuel exposure and little other information from which to assess performance, which risks perpetuating the catch-all character of Article 8 under SFDR 1.0.  

Where the institutions stand

• The Commission published its proposal on 20 November 2025 (our analysis). It removes entity-level disclosures and establishes three product categories: ESG Basics (Article 8), Transition (new Article 7) and Sustainable (Article 9). Each category combines allocation criteria, exclusions and PAI disclosure. The proposal also contains naming and marketing rules and a disclaimer for non-categorised products.
• Council agreed its negotiating mandate on 19 June 2026 (our analysis).
• Parliament's ECON committee adopted its report (A10-0234/2026) on 10 September 2026 by 37 votes to 9, with 4 abstentions, and its negotiating mandate by 41 votes to 7, with 1 abstention (our analysis of the final position).
• The three texts differ on several points that determine the ambition of the file. The table below lists them in order of priority from our perspective.

Recommendations for trilogue

Below, we set out our three priorities for the trilogue and the specific solutions we recommend to address them.

> Priority 1: a minimum PAI baseline for ESG Basics, including GHG emissions

Parliament requires a single indicator for ESG Basics, exposure to the fossil fuel sector, and this must be retained. We ask that Parliament's own Transition wording be applied to Article 8, so that ESG Basics products report GHG emissions and fossil fuel exposure, together with one further indicator selected for relevance. This corresponds to the three indicators required by Council for Transition and Sustainable.

> Priority 2: PAI disclosure for products relying on the benchmark safe harbour

Council limits the effect of safe harbour to points (a) to (c) of the first subparagraph, so that PAI disclosure under point (d) continues to apply to products using the bypass. Parliament deems all conditions met. We ask the co-legislators to support the Council's scope.

> Priority 3: delete the AIF opt-out and, if one is retained, adopt Parliament's narrower version with explicit application of the naming ban

The Commission proposal contains no opt-out, and we ask the co-legislators to maintain this position. If an opt-out is retained, Parliament's version is preferable to Council's, because it requires that no retail investor has access to the fund and requires a pre-contractual statement of non-categorisation.