Commission to amend the Sustainable Finance Disclosure Regulation as part of its simplification effort

“Simpler, more efficient rules, and better aligned with market realities”: this is how the European Commission presented its amendment to the transparency framework for sustainable financial products, adopted in Brussels on 20/11/2025.

The Sustainable Finance Disclosure Regulation, in force since 2021, is the EU framework for the transparency of financial products that include environmental and social aims. The objective of this simplification is to address the difficulty of the regulation in meeting its purpose of helping the financial sector allocate capital to Europe’s sustainable priorities.

“The SFDR was developed as a disclosure regime, but because the industry needed a tool to communicate on ESG claims, the industry has been using SFDR as a labelling scheme, which was not the intention. As a result, many stakeholders and consumers are saying that the framework gives rise to greenwashing,” states the Commission.

The amendment introduces two main elements: simplified disclosures and a three-category system for financial products making ESG claims.Expected outcomes are that…