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On 28 April 2026, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) published a draft report proposing amendments to the European Commission’s SFDR 2.0 proposal. ECON broadly supports the Commission’s direction of simplifying the framework and introducing product categories, while it proposes targeted changes tightening several conditions that are operationally significant for financial market participants (FMPs), notably in scope, investor protection for non‑categorized products, and product comparability.
Key amendments proposed by ECON and implications for FMPs
What does this mean in practice?
The biggest operational item is the mandatory PAI set. Product-level PAI infrastructure built for the original SFDR is reusable but needs re-scoping against the three new categories and the still-to-come delegated act under Article 19b.
The ESG Basics 20% screening rule changes how "best-in-class" or ESG-outperformance products are constructed. Some products will move into Transition, some will be restructured, some will end up outside the category framework.
The disclaimer for non-categorized products is a commercial as well as a compliance question. Anything that references ESG without sitting in a category will carry the explicit "does not meet EU standards" statement in client-facing documents.
The CTB/PAB safe harbour removal affects benchmark-driven and index-tracking products that were relying on those routes to qualify.
Practical recommendations for FMPs
- Map what is in scope by maintaining a clear inventory of the relevant entities and products, as well as the investor‑facing documents and channels where sustainability features are described, and ensure consistency across disclosures
- Run a product level PAI readiness check, identify reliable data, gaps, and cost of closure
- Model the 20% bottom-exclusion rule against current ESG Basics candidates. Identify which products survive, which require restructuring/reclassification
- Strengthen data governance, documentation and data quality by assigning clear ownership, performing regular validation checks, and implementing a structured issue‑remediation process so that sustainability data remains accurate, consistent and auditable
- Put in place a light change‑management routine to track legislative developments and translate them into controlled updates of templates, data requirements and internal approvals once the final Regulation and subsequent specifications are confirmed
SFDR 2.0 is progressing under the ordinary legislative procedure. The European Commission published the proposal on 20 November 2025, and ECON published its draft report on 28 April 2026.
The next key “waves” for firms are:
How EY can support
Knowing the SFDR agenda is evolving fast, EY can support firms with an impact assessment and implementation roadmap, covering category strategy, disclosure redesign and operational implementation, including governance and scalable disclosure production across European languages and distribution channels.
Our team is here to guide you through the transition process and support you in achieving compliance with SFDR 2.0, including forthcoming detailed guidance. Through EY.ai Greensight, an AI-powered tool, we help you maintain a clear overview of sustainability communications, identify greenwashing risks, and reduce the likelihood of publishing claims that conflict with applicable legislation.
For further clarifications or to discuss your specific needs, please reach out to our regulatory experts.
Summary
On 28 April 2026, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) published a draft report proposing amendments to the European Commission’s SFDR 2.0 proposal.
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