EU · regulation
Regulation (EU) 2019/2088 (in force); SFDR 2.0 proposal COM(2025) 633 (pending)
Scope
It applies to financial market participants and financial advisers, and to financial products made available in the EU. The framework regulates disclosure and does not impose Dictionary termSustainabilityThe capacity to maintain valued social, ecological and economic functions over time without depleting the foundations on which they depend or shifting unacceptable costs to others.Read the full definition obligations on non-financial companies simply because they are investees.
Penalties
Article 14 requires Member States to establish effective, proportionate and dissuasive measures and penalties. There is no EU-wide fine schedule; competent-authority practice and penalty levels are national.
Last verified
2026-08-26
In plain language
The Dictionary termSustainable finance disclosureSustainable finance disclosure is reporting by financial institutions or products about sustainability characteristics, risks, impacts, objectives or methodologies.Read the full definition Regulation is an EU Dictionary termTransparencyThe practice of making relevant information accessible, understandable, timely and usable so that stakeholders can evaluate decisions, performance and claims.Read the full definition regime for financial market participants and financial advisers. It governs Dictionary termSustainability RiskAn environmental, social or governance event or condition that could materially harm an entity's financial position — the outside-in half of double materiality.Read the full definition , principal-adverse-impact and product disclosures; it is not an EU product-label regime.
Formal requirements
Reviewed provisions grouped by practical purpose. Use the official text for the full legal context.
Trilogue pending (Parliament ECON Sep 2026)
SFDR — Regulation (EU) 2019/2088 (in force) and SFDR 2.0 proposal COM(2025) 633 (pending) · instrument-level citationapplication 24 months after entry into force (~2028 earliest)
SFDR — Regulation (EU) 2019/2088 (in force) and SFDR 2.0 proposal COM(2025) 633 (pending) · instrument-level citationThe Commission proposed SFDR amendments on 20 November 2025. The proposal is not current law; the existing SFDR framework continues to apply.
European Commission SFDR revision proposalwebsite Dictionary termSustainability RiskAn environmental, social or governance event or condition that could materially harm an entity's financial position — the outside-in half of double materiality.Read the full definition integration policies
SFDR — Art. 3PAI statement — principal Dictionary termAdverse impactsAdverse impacts are negative effects on people, the environment, rights, communities or systems connected to an organisation, product, activity or relationship.Read the full definition statement (mandatory >500 employees; comply-or-explain below)
SFDR — Art. 4Remuneration policy consistency with Dictionary termSustainability RiskAn environmental, social or governance event or condition that could materially harm an entity's financial position — the outside-in half of double materiality.Read the full definition integration
SFDR — Art. 5pre-contractual Dictionary termSustainability RiskAn environmental, social or governance event or condition that could materially harm an entity's financial position — the outside-in half of double materiality.Read the full definition integration + likely impacts on returns
SFDR — Art. 6Products promoting environmental/social characteristics ("light green") — pre-contractual & periodic disclosures
SFDR — Art. 8Products with sustainable-investment objective ("dark green") — pre-contractual & periodic disclosures
SFDR — Art. 9SFDR requires entity-level Dictionary termSustainability RiskAn environmental, social or governance event or condition that could materially harm an entity's financial position — the outside-in half of double materiality.Read the full definition , principal-Dictionary termAdverse impactadverse environmental impact or adverse human rights impact (3(1)(d))Read the full definition and remuneration disclosures, plus product-level disclosures. Articles 8 and 9 create enhanced disclosure duties, not EU labels.
Regulation (EU) 2019/208870% minimum Dictionary termPortfolio alignmentPortfolio alignment is an assessment of how an investment, lending or asset portfolio compares with a climate, sustainability or transition pathway.Read the full definition with the category objective
SFDR — Regulation (EU) 2019/2088 (in force) and SFDR 2.0 proposal COM(2025) 633 (pending) · instrument-level citationTable 1 — 14 mandatory corporate indicators: GHG emissions (Scope 1/2/3, total); Dictionary termCarbon footprintThe quantified greenhouse-gas emissions associated with a defined organisation, product, activity, event or other subject across a stated boundary and period.Read the full definition ; GHG intensity of investees; fossil-fuel sector exposure; Dictionary termNon-renewable energyNon-renewable energy is energy derived from finite sources that are not replenished on human timescales, such as coal, oil, gas or uranium.Read the full definition share; energy consumption intensity per high-impact sector; Dictionary termBiodiversityThe variability of life within species, between species and across ecosystems, together with the relationships that allow living systems to function.Read the full definition -sensitive-area activities; emissions to water; hazardous waste ratio; UNGC/OECD violations; lack of UNGC/OECD monitoring processes; unadjusted gender pay gap; board gender diversity; controversial-weapons exposure.
SFDR · instrument-level citationTables 2–3 — additional environmental/social opt-in indicators; sovereigns & real-estate Dictionary termIndicatorA quantitative or qualitative variable used to signal, describe or track a condition or change relevant to a defined result, objective or decision.Read the full definition sets.
SFDR · instrument-level citationEntity-level disclosures removed
SFDR — Regulation (EU) 2019/2088 (in force) and SFDR 2.0 proposal COM(2025) 633 (pending) · instrument-level citationproduct-level PAI retained for Sustainable/Transition
SFDR — Regulation (EU) 2019/2088 (in force) and SFDR 2.0 proposal COM(2025) 633 (pending) · instrument-level citationDictionary
Terms with a retained, published connection to this legal source.
Claims
Search or filter the reviewed connections, then open one claim for its full market-by-market assessment.
Validated pathway; disclose Dictionary termMetricA defined method of quantification or calculation, including its unit, formula, boundary and data rules, used to express an aspect of performance or condition.Read the full definition scope (portfolio vs operations)
80% evidence; PAB/CTB exclusions; SFDR pre-contractual consistency
Measurable impact intentionality; Dictionary termContributionA substantiated causal role played by an intervention within a wider set of influences, supported by a credible theory of change and evidence that expected mechanisms operated.Read the full definition evidence
Dictionary termFinanced emissionsFinanced emissions are greenhouse gas emissions associated with lending, investment, underwriting or other financial activities attributed to a financial institution.Read the full definition Dictionary termBaselineA documented reference condition, value or scenario against which change is assessed, defined for a specific indicator, population, boundary and point or period in time.Read the full definition (PCAF), interim targets, sector pathways
Pre-contractual + periodic disclosures; PAI consideration
Disclose screening criteria, exclusions, % coverage; if 'ESG' in name: 80% threshold + CTB exclusions.