Whilst not unexpected, the long-awaited review of the EU Sustainable Finance Disclosure Regulation (SFDR), originally scheduled for Q4 2025, is now likely to be delayed to Q1 2026. This follows the public and targeted consultation on SFDR launched in 2023 and the subsequent Call for Evidence, which provided the market with a final opportunity to input on the new SFDR regime and has closed as of 30 May 2025.
The potential delay is primarily due to ongoing legislative discussions around the Omnibus package – a legislative initiative aimed at simplifying and aligning various EU sustainability reporting frameworks, including the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS). The Omnibus package is intended to harmonise and rationalise sustainability reporting requirements across the EU, and its outcome will directly impact the shape and timing of the SFDR review.
The SFDR review is expected to address simplification of the framework, prevention of greenwashing, and reduction of ESG reporting burdens. It will also consider product categorisation, principal adverse impacts, and harmonisation of requirements, with a particular focus on the needs of different investor types and the international exposure of investments. Feedback from the Call for Evidence indicates continued support for the SFDR’s objectives, but also highlights the need for a more proportionate and effective regime.
Parliament is expected to begin negotiations on aspects of the Omnibus package in September, with a vote in October and trilogue discussions in November.
The review remains officially expected in Q4 2025 but given the legislative timeline described above, a delay to Q1 2026 seems likely.
