The EU has been a leader in sustainable finance regulation. The green bonds regulation, EU taxonomy, SFDR, and fund name guidelines all contribute to the EU’s market regulation strategy. However, the number of financial regulations floating around are complicating matters. As the EU prepares for SFDR 2.0, lawmakers and agencies are looking to streamline the rules as heavily as possible. To that end, the European Securities and Markets Authority (ESMA) recently published its annual work program. This document sets out the ESMA’s priorities for 2027 and includes a review of the EU fund name guidelines:
“Depending on the outcome of the legislative review, ESMA may, jointly with the other ESAs, prepare technical advice for new Level 2 measures (which may include consumer testing) and revise existing Level 3 Q&As to reflect the revised SFDR framework. Separately, ESMA will review the Guidelines on funds’ names using ESG- or sustainability-related terms in light of the outcome of the SFDR negotiations.”
It appears the ESMA is anticipating a shift to SFDR 2.0 as one controlling source of truth for sustainability regulation in finance. The agency reports that they are expecting to issue technical advice and conduct testing on SFDR 2.0 in Q4 of 2027. By aligning regulations under one banner, the EU is hoping to make it easier to find and understand its rules and regulations.
Our members can learn more about sustainable finance regulation here.
