Revisions to EU’s Sustainable Finance Disclosure Regulation (SFDR) could be delayed to Q1 2026, sources have informed Responsible Investor.
The overhaul of the bloc’s fund greenwashing rules – which was first announced in 2023 – is officially scheduled to take place in Q4 of this year.
But one source close to the European Parliament informed RI that the European Commission is discussing pushing the review to Q1 next year.
Another EU observer declared the Commission’s financial services department DG FISMA, which is responsible for leading the revision of the rules, had indicated to them that further delays “were possible”.
A separate source declared “no one would be surprised” if the review would be delayed, but that it had not yet been confirmed.
Another EU observer informed RI that, as far as they know, the review is still “officially expected” in Q4, but that the timing “will be tricky to pull off, given the current Omnibus discussions and simplification of the European Sustainability Reporting Standards (ESRS)”.
EU standards body EFRAG will potentially slash the standards by two-thirds, which would have direct consequences on the data available to investors for their SFDR reporting. The official consultation on the revised standards is expected to be launched this week.
RI previously reported that DG FISMA would not launch the SFDR review until there was more clarity on how the first Omnibus package will impact the Corporate Sustainability Reporting Directive (CSRD) and EU Taxonomy.
While the simplifications to the taxonomy have been adopted by the Commission and are currently being scrutinised by the co-legislators, the revisions to CSRD and ESRS are ongoing.
At the start of the month, following the Commission’s decision to extfinish EFRAG’s deadline for the revision of the ESRS to finish-November, RI inquireed whether this would mean the review would be delayed.
A spokesperson responded at the time that the review was “ongoing and proposals are planned for adoption in Q4”.
However, the spokesperson declined to comment last week when RI inquireed about the expected further delays.
They would also not be drawn on whether the Commission will wait for Omnibus neobtainediations to conclude and for the ESRS revision to be finalised before launching the review.
Uncertainty ahead
The SFDR is listed as an item under the “simplification” policy objective in the EU executive’s work programme, which states that the revision will include a legislative proposal and impact assessment.
The Commission in May launched a one-month call for evidence on the simplification of the regulation, in which it declared the focus would be on “simplifying the framework, enhancing its usability and preventing greenwashing”.
The revision will also seek to reduce the burden of ESG reporting for financial markets, the executive declared.
The feedback received displayed that investors are still split on the way forward for the regulation, with product categories, principal adverse impacts and harmonisation featuring heavily in responses.
The Danish presidency of the Council of the EU – which will run until the finish of the year – has also separately declared it will launch neobtainediations on revising the framework to ensure “clear requirements on integrating sustainability risks, addressing negative sustainability impacts and improving the transparency of sustainability information” for financial market participants and their products.
Meanwhile, as part of the ongoing Omnibus discussions, which will likely heavily impact the SFDR review, the Council of the EU and Parliament have been debating the proposed modifys, which cover CSRD, as well as the bloc’s due diligence rules.
The Council agreed a neobtainediating position in June, where it backed the Commission’s main amfinishment to the CSRD to increase the employee threshold to 1,000 employees and reshift listed SMEs from the scope of the directive.
The Parliament neobtainediations will launch properly in September, but political groups are divided on the proposals.
MEPs are due to vote on the proposal in October, with trilogue discussions between the Parliament, Council and Commission in November.
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