Overview
This analysis concerns the legislative file 2025/0361(COD), a proposal for a Regulation of the European Parliament and of the Council amending the Sustainable Finance Disclosure Regulation (SFDR) and the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation. The procedure is ongoing at first reading, with the European Parliament awaiting a committee decision. The analysis is based on a Council Presidency non-paper (WK 2521 2026 INIT) which structures the Council's technical examination, alongside procedural and stakeholder data.
Legislative timeline
The file was referred to the European Parliament's lead committee on 12 February 2026. In the Council, technical examination is underway, with a working party meeting documented on 23 February 2026 for which the Presidency non-paper was prepared. An earlier Regulatory Scrutiny Board opinion on the Commission proposal was issued on 12 September 2025. The next key procedural milestone is the adoption of the European Parliament committee report.
Institutional handling
The lead committee in the European Parliament is the Committee on Economic and Monetary Affairs (ECON). In the Commission, the responsible Directorate-General is DG Trade, under the authority of Executive Vice-President Maroš Šefčovič. The Council configuration handling the file is the Economic and Financial Affairs Council (ECOFIN).
Stakeholder reactions
Stakeholder engagement has been active, with 59 documented meetings held with EU policymakers: 45 with Members of the European Parliament, 12 with Commissioners, and 2 with European Commission staff. These involved 42 distinct organisations. The most frequently engaged stakeholders include Finance Watch, the Dutch Fund and Asset Management Association, Morningstar, Inc, the European Savings and Retail Banking Group, and Fidelity International.
On specific policy aspects, stakeholder positions vary. Regarding the EU's approach to sustainability criteria in private investments, Finance Watch, France Assureurs, and the Frank Bold Society express opposition, with the latter welcoming the SFDR categorization system but focusing on robust implementation. In contrast, Fidelity International supports the approach, subtly favoring the prioritization of financial performance. On financial regulation, Finance Watch opposes permissive rules, while Fidelity International, Insurance Europe, and AXA support a more permissive regulatory approach. On the tangential issue of defence spending, France Assureurs supports greater EU defence spending by advocating for private sector financing of defence needs.
Policy context (from Council examination)
The Council Presidency non-paper (WK 2521 2026 INIT) details the technical examination of the Commission's proposal, focusing on two core substantive areas. The first is the treatment of complex financial products under a proposed Article 9a, which sets rules for products like insurance or pension schemes that invest in other categorised sustainable funds. The framework offers two pathways: categorisation as a sustainable product if a 70% portfolio threshold is met, or disclosure of exposure if investing in at least two underlying categorised products. A key issue under discussion is whether this framework adequately covers insurance and pension products, which often hold general-purpose public sector bonds that are excluded from the main thresholds.
The second area concerns the investment approaches for the three new product categories ("Sustainable," "Transition," and "ESG Basics"). Key provisions under debate include the 70% minimum portfolio threshold for alignment with the claimed ESG objective, with some member states preferring an 80% threshold. There are member state concerns about the potential greenwashing risks posed by an "open list" of permissible standards and metrics for demonstrating alignment. The proposed safe harbours are also contentious, notably the rule allowing Taxonomy-aligned investments to count towards the 70% threshold, where a proposed 15% sub-threshold specifically for Taxonomy alignment is under pressure. Furthermore, the exclusion of general-purpose public sector bonds from counting towards the threshold in the Sustainable and Transition categories is a divisive issue among member states.
The non-paper is expected to impact the legislative procedure by identifying these clear fault lines and technical concerns, which the Presidency must navigate to achieve a common Council position. It signals that member states seek significant clarifications and potential safeguards, particularly regarding the flexibility of the "open list" approach and the practical application of Article 9a to complex insurance products.