The European Commission has announced a delay in the implementation of revisions to the Sustainable Finance Disclosure Regulation (SFDR) until Q4 2025, as well as more details on its Omnibus package.
In its 2025 Work Programme, the Commission confirmed it would delay the revision of SFDR until Q4 2025 under its ‘simplification’ agenda.
Meanwhile, the Commission reiterated plans for the Omnibus, which is designed to streamline and simplify sustainability reporting, sustainability due diligence and taxonomy, while creating a new category of small mid-caps with adapted requirements. Other measures will facilitate the implementation of the InvestEU programme and the European Fund for strategic investments, including simplifying reporting and boosting investment.
President of the European Commission, Ursula von der Leyen, commented: “Citizens and businesses have called for a simpler EU that delivers prosperity. This work programme is our answer. We’ve heard you, we’re simplifying, and we will deliver. This roadmap charts our course to a more competitive, resilient, and growth-oriented Europe.”
Delay ‘no surprise’ amidst dissenting voices
Helen Slater, regulatory manager at FE fundinfo, told PA Future the delay doesn’t come as a surprise. “There have been a lot of dissenting voices around whether the current framework meets EU citizens’ needs, not least from the incumbent Commissioner. The ESAs and other bodies have put in several recommendations to the European Commission relating to what is needed to ensure that SFDR delivers on its promises, particularly in relation to product categorisation and greenwashing.
“If another six months means that this gives the Commission the time to consider these recommendations and come up with a meaningful and workable solution, then our industry will just have to await the new rules with patience.”
Tom Willman, regulatory lead at Clarity AI agreed: “The decision to delay SFDR until Q4 in the current circumstances seems sensible. Firstly, it allows time to understand any implications from the Omnibus. Secondly, it provides an opportunity to further observe the rollout of other fund labelling regulations globally —most notably the UK’s SDR regulation— and any lessons learned.
“Now, attention turns to 26 February, when further details of the Omnibus package will be revealed, providing a clearer picture of the next steps and potential impacts.”
Consultation input
In December, the EU Platform on Sustainable Finance published a briefing note setting out a proposal to establish a product categorisation scheme for SFDR, which was considered “an indicative direction” that the Commission may pursue by law firm Linklaters.
It recommended categorising products under one of three sustainability strategies: Sustainable; Transition; or ESG Collection. Funds in each category would need to meet certain minimum exclusion criteria and a certain percentage of the portfolio should meet the ESG criteria. It further recommended that all other products should be identified as ‘unclassified products’.
Elsewhere, last month, the European Fund and Asset Management Association (EFAMA) asserted that, to make the Omnibus a successful exercise for both corporates and investors, the Commission must ensure “consistent definitions and reporting requirements” across existing EU legislations. This should include not only CSDDD and CSRD, but also SFDR.
“European asset managers occupy a unique position in that they must prepare CSRD reports for their operations while also being users of CSRD reporting in their role as investors. Sustainability reporting by investee companies guides their sustainable investments and allows them to comply with their sustainability reporting obligations under the SFDR. Without available CSRD data, asset managers are reliant on ever more expensive ESG data and ratings from third-party providers,” EFAMA argued.
Additionally, according to EFAMA, the European investment management industry is seeking urgent confirmation that asset management companies are not required to include clients’ assets as part of their own CSRD reporting.
“This is crucial as, while the CSRD text rightly excludes fund products (UCITS funds and AIFs) from reporting, it is not clear enough that clients’ investments – which are not part of an asset manager’s balance sheet given the agency nature of its business – must not be seen as part of its ‘value chain’.”
