Sustainability transparency framework: Council agrees on update and simplification of existing SFDR

On 24 June 2026, the Council agreed its negotiating position on an updated sustainability transparency framework for financial products sold in the European Union. The objective is to ease administrative burdens and help investors better understand and compare sustainability-related financial products. According to the Council, the review updates the existing Sustainable Finance Disclosure Regulation (SFDR), which requires market participants to disclose how they integrate social, environmental and governance (ESG) sustainability risks and adverse impacts into their investment offerings.

The Council introduced the following main amendments:

•Reinforcement of the sustainable and transition categories: when companies identify and disclose the principal adverse impacts of their investments on sustainability factors, they must mandatorily use at least three indicators drawn from a list to be provided by the Commission to substantiate their claims.
•Clarification of the status of companies active in the fossil fuel sector: those allocating 20% of their capital expenditure to economic…