The European Commission has proposed changes to the Sustainable Finance Disclosure Regulation (SFDR) in order to simplify the rules for investors.

The leaked proposals would mean replacing Article 8 and 9 fund classifications that were introduced in 2021 with three new  categories:

(i) transition-related objective (new Article 7)

(ii) integration of sustainability-related factors, beyond risk management (new Article 8)

(iii) sustainability-related objectives (new Article 9).

The changes would also mean the removal of “sustainable investment” and “do no significant harm” as stand alone terms. The mandatory minimum investment commitment in all three cases is proposed to be 70%.

The draft proposals are currently subject to negotiation and adoption by the European Parliament and Council.

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