The legal reminder that the market had forgotten

Since its entry into force, Regulation (EU) 2019/2088, known as SFDR, imposes transparency obligations on financial actors regarding how environmental, social and governance issues are integrated, or not, into investment decisions.

This system is structured around three categories:

• Article 6: Products without structured ESG integration;
• Article 8: products incorporating environmental and/or social characteristics;
• Article 9: Products pursuing a sustainable investment objective.

None of these articles constitute a label. None attests to a level of environmental performance. None is based on independent evidence or a legally binding assessment.

This legal framework was clear from the outset. However, it has been widely overinterpreted by market practices.

These abuses are now acknowledged

The proposed revision of the SFDR explicitly identifies several dysfunctions:

• the use of articles 8 and 9 as marketing quality signs;
• a persistent confusion between declared transparency and actual performance;
• a lack of alignment with other structuring European frameworks, in particular the European Taxonomy, the CSRD, the ESMA guidelines on fund naming, and the future regulation relating to environmental claims (Green Claims);
• an incompatibility with the real estate sector, where transition strategies are central but difficult to qualify within the current SFDR framework.

This is not a marginal adjustment. It is a fundamental readjustment.

What the proposed revision actually changes

Three key structural developments are emerging:

1. The introduction of new fund categories, explicitly incorporating transition strategies and normative exclusions.
2. Alignment with ESMA guidelines on the use of ESG and sustainable terms in the naming of financial products, in order to put an end to semantic ambiguities.
3. A questioning of the “entity” level of PAIs, with a proposal to remove the corresponding obligations.

The SFDR thus returns to its initial scope: a tool for transparency, and not a labeling mechanism.

A direct consequence for real estate and sustainable finance

This clarification has an immediate effect: proof of sustainability can no longer be implicitly provided by the SFDR.

She must now:

• to be external to the SFDR system;
• based on explicit methodologies;
• produce measurable, verifiable and comparable results;
• to be consistent with the CSRD, ESMA requirements and the future Green Claims regulation.

In other words, the SFDR does not replace independent assessment, certification, or the production of evidence. It makes them necessary.

Calendar and scope

Following adoption by the European Parliament and the Council, the revision of the SFDR will enter into force twenty days after its publication, for effective implementation within eighteen months, with an operational horizon around 2027.

The time allowed for the market is limited. The direction, however, is now unambiguous.

Conclusion

The revision of the SFDR does not strengthen ESG communication. It reduces its scope of interpretation.

She is not creating new labels. She is putting an end to confusion.

For actors based on display, it's a break. For those already working on evidence, traceability and independent evaluation, it's a confirmation.

The frame tightens. Reality reasserts itself.

Sources and references

1. European Commission, Proposal for a Regulation amending Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (SFDR), presentation in autumn 2025, EUR-Lex.
2. European Commission, Explanatory Memorandum – SFDR Review, 2025.
3. Regulation (EU) 2020/852 establishing a framework to facilitate sustainable investment (European Taxonomy).
4. Directive (EU) 2022/2464, Corporate Sustainability Reporting Directive (CSRD).
5. ESMA, Final Report – Guidelines on Funds' Names Using ESG or Sustainability-Related Terms, May 2024.
6. European Commission, Proposal for a Regulation on the Substantiation and Communication of Explicit Environmental Claims (Green Claims).