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Published on 20 November 2025, SFDR 2.0 represents a major shift in the EU’s sustainable finance framework by replacing entity-level disclosures with a simplified, product-focused approach. It introduces three clear product categories (sustainable, transition and ESG basics) while streamlining pre-contractual and periodic reporting to improve clarity and comparability for investors. For fund managers, these changes could significantly reduce compliance burdens and costs, but they also raise strategic challenges: managers will need to reassess product positioning, ensure alignment with new category criteria, and adapt marketing practices to avoid greenwashing risks.
Overview of the key differences between SFDR 1.0 and SFDR 2.0
While SFDR 2.0 is not yet in force, fund managers must continue to comply with the current SFDR framework. To support you in meeting these ongoing requirements, we invite you to consult our special publication SFDR Barometer.
Recommendations
SFDR 2.0 marks a structural shift from disclosure-heavy compliance to clearer, rule-based product categorization. While the streamlined framework promises reduced reporting burdens and improved investor comparability, it also requires fund managers to make early strategic decisions on product positioning, portfolio construction, and marketing claims. The following recommendations are designed to help fund managers anticipate regulatory expectations, mitigate greenwashing risk, and use the transition to SFDR 2.0 as an opportunity to re-qualify product ranges and strengthen the credibility of their sustainable investment offerings.
Key recommendations
How EY Can Help?
EY Luxembourg supports financial institutions across the sustainable finance journey through a broad range of services, including:
- Advisory services tailored to the SFDR framework
- SFDR review services encompassing a thorough evaluation of pre-contractual and periodic disclosures documentation for Article 6, Article 7, Article 8 and Article 9
- Robust assurance services on disclosures prepared in accordance with CSRD, TCFD, SFDR, EU Taxonomy, IFRS, and GRI Standards (and more)
- Green Bonds and GHG Emissions assessments
- Specialized training sessions focused on key aspects of SFDR, including benchmarks, Principal Adverse Impact (PAI) assessments, SFDR and EU Taxonomy compliance
- Comprehensive assurance readiness to identify areas of improvement in sustainability reporting practices
- Reasonable assurance for subscription tax reduction
- Proportion of EU Taxonomy aligned investments Reasonable Assurance (ISAE 3000 (revised)) + «Certified statement» ISRS 4400 Agreed upon procedures
- SFDR Periodic Disclosure Limited Assurance (ISAE 3000 (revised))
- PAI Statement Limited Assurance (ISAE 3000 (revised))
- SFDR Periodic Disclosure
- SFDR Periodic Disclosure Gap Analysis (useful for all the funds within the same classification)
Discover our Climate Change & Sustainability services and read our latest thought leadership by visiting our website Climate change & sustainability services | EY Luxembourg.
Summary
Published on 20 November 2025, SFDR 2.0 represents a major shift in the EU’s sustainable finance framework by replacing entity-level disclosures with a simplified, product-focused approach. It introduces three clear product categories (sustainable, transition and ESG basics) while streamlining pre-contractual and periodic reporting to improve clarity and comparability for investors.
How EY can Help
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