On November 20, the European Commission released its long-awaited legislative proposal for SFDR 2.0 - sparking major buzz across the industry. It marks a pivotal shift away from the legacy Article 8/9 framework toward a clearer, more consistent, and investor-focused system.
Here’s what you need to know:
1. New Product Categories Replace Articles 8 & 9
SFDR 2.0 introduces three defined product categories, each with a 70% asset-alignment threshold and mandatory exclusions:
- Sustainable products – targeting environmental or social objectives
- Transition products – supporting companies on a pathway toward improved sustainability
- ESG Basics – using ESG factors meaningfully but without a specific sustainability or transition goal
2. Streamlined and More Focused Disclosures
The proposal removes entity-level PAI disclosures, significantly reducing compliance burdens.
Product-level reporting becomes shorter and more standardized, with simplified templates and clearer expectations around exclusions and methodologies.
3. Strengthened Naming & Marketing Rules
Only products that meet the criteria for one of the new categories may use sustainability-related terms in their names or marketing materials.
4. Better Alignment With the EU’s Broader Framework
SFDR 2.0 seeks to improve consistency with related EU sustainability rules, including the Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy, reducing overlaps and improving coherence across the system.
5. Adjusted Scope & Transitional Provisions
Closed-ended funds created and distributed before SFDR 2.0 applies may opt out. However, the earlier idea of exempting professional-only funds was dropped in the published proposal, meaning managers may need to reassess their classifications and disclosures.
As the proposal enters the legislative process, Cambio will continue tracking any developments to SFDR 2.0.
We’re here to help you navigate what this means for your investment strategies and regulatory obligations!
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