{"id":38015,"date":"2025-09-18T15:09:11","date_gmt":"2025-09-18T13:09:11","guid":{"rendered":"https:\/\/reclaimfinance.org\/site\/?p=38015"},"modified":"2026-01-20T11:29:37","modified_gmt":"2026-01-20T10:29:37","slug":"lobbying-for-a-greenwashed-sfdr","status":"publish","type":"post","link":"https:\/\/reclaimfinance.org\/site\/en\/2025\/09\/18\/lobbying-for-a-greenwashed-sfdr\/","title":{"rendered":"Lobbying for a greenwashed SFDR?"},"content":{"rendered":"

Major financial institutions are lobbying for revised European sustainability fund rules to maintain the status quo and to enable \u201cESG\u201d or \u201ctransition\u201d funds to support even the most polluting companies. Indeed, the analysis of the responses provided by financial institutions and their interest groups to the consultation conducted by the EU Commission in May 2025 suggests they are pressing for the reviewed Sustainable Finance Disclosure Regulation (SFDR) to include broad fund categories with no or very limited exclusions. Sometimes misrepresenting the recommendations of the EU Platform on sustainable finance, they are pushing to limit fossil fuel exclusions to just one SFDR category – effectively giving fossil fuel developers a safe haven in all the others.<\/p>\n<\/div>

In May 2025, the EU Commission opened a <\/span>consultation on the \u201crevision of EU rules on sustainable finance disclosure\u201d<\/a><\/span>. This consultation was the last opportunity for stakeholders to provide input before the Commission finalizes its proposal for the SFDR review. Analyzing the responses provided to the consultation by financial institutions and the organizations representing them therefore gives an overview of their priorities for this file (1).\u00a0<\/span>\u00a0<\/span><\/p>\n<\/div>

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Flexibility and inclusiveness: vague principles for preserving existing greenwashing practices<\/h2><\/span>
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Financial institutions and their representatives use generic terms in their consultation responses, making it difficult for non-specialists to understand what the implications of their demands would be. They often call for \u201cminimum requirements\u201d to be defined for each SFDR category (2) and some even explicitly reject a \u201ccatch-all\u201d category (3). Yet, at the same time, their responses point toward at least one \u2013 and usually two – broad SFDR category whose characteristics would be loosely defined and would enable the financing of highly polluting companies and activities.<\/p>\n

These categories are named \u00ab\u00a0transition\u00a0\u00bb, \u00ab\u00a0ESG\u00a0\u00bb or \u00ab\u00a0responsible\u00a0\u00bb, depending on the response. Regardless of the exact label used, financial institutions unanimously push for a \u201cflexible\u201d categorization system that avoids \u201cprescriptive\u201d metrics, considers all investment strategies and is tailored to integrate current market practices (4).<\/p>\n<\/div><\/div><\/div>

Blackrock<\/span><\/span>:<\/p>\n<\/div>

\u201c<\/span>A flexible, principles-based categorisation framework, backed up with relevant disclosures, is best suited to reflect the broad range of sustainable objectives that investors have – from risk management through exclusions, to impact. Narrow or overly prescriptive labels would fail to capture this diversity.<\/span><\/i>\u201d<\/span>\u00a0<\/span><\/p>\n<\/div><\/div><\/div>

Union AM:<\/p>\n<\/div>

\u201cWe strongly suggest a theme-based categorisation that reflects different product types, asset classes, investor needs and objectives on sustainability via different investment strategies.\u201d<\/em><\/p>\n<\/div><\/div><\/div>

Furthermore, they underline the need for all products currently commercialized under articles 8 and 9 to fit into future SFDR categories. But this would mean preexisting greenwashing practices that were among the leading reasons to review SFDR would be maintained, and retail investors would continue to be misled. Axa Group goes as far as to reject the review of the SFDR and promote instead \u201cquick fixes and methodologies clarification\u201d (5).<\/p>\n<\/div><\/div><\/div>

Vanguard AM:<\/p>\n<\/div>

\u201c[\u2026] it should be ensured that such a framework is inclusive of existing investment strategies and capturing the majority of the current Article 8 and Article 9 products\u201d.<\/em><\/p>\n<\/div><\/div><\/div>

INVERCO:<\/p>\n<\/div>

\u201cA prospect categorization system should: [\u2026] e) Integrate all products currently disclosed under Articles 8 and 9.\u201d<\/em><\/p>\n<\/div><\/div><\/div>

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Keeping fossil fuels in \u201cESG\u201d and \u201ctransition\u201d funds<\/h2><\/span>
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In recent years, it has become clear that including fossil fuel companies \u2013 and especially those developing new projects \u2013 is a strong indicator of fund greenwashing. Research repeatedly revealed that Article 8 and 9 funds still massively support these companies, unknowingly to retail investors.<\/p>\n

Yet, most financial institutions \u2013 including BPCE, BNP AM, Blackrock, Axa, Allianz and Schroders – do not mention the exclusion of fossil fuels in their contributions (6). Except for La Banque Postale Asset Management (7) and Triodos Bank (8), all other institutions mentioning fossil fuels only recommend exclusions for a \u201csustainable\u201d category (9). Concretely, these proposals would mean that other new SFDR categories \u2013 for example \u201ctransition\u201d, \u201cESG\u201d or \u00ab\u00a0impact\u00a0\u00bb categories \u2013 would not include any fossil fuel exclusion. This is sometimes justified by the need to \u201calign\u201d with recently published ESMA fund naming guidelines, rules that were influenced by the lobbying of the same institutions and have unfortunately already shown their limitations (10).<\/p>\n<\/div><\/div><\/div>

Amundi:<\/p>\n<\/div>

\u201cthe concepts defined in the [ESMA fund naming] guidelines should be embodied in the new SFDR framework with the CTB exclusions applying to the \u201cE, S, G Focus\u201d and \u201cTransition\u201d categories and the PAB exclusions applying to the \u201cSustainable\u201d category\u201d.<\/em><\/p>\n<\/div><\/div><\/div>

Vanguard AM:<\/p>\n<\/div>

\u201cIn the interest of regulatory harmonisation and clarity, the ESMA Fund Naming Guidelines should be factored into changes to the SFDR regime.\u201d<\/em><\/p>\n<\/div><\/div><\/div>

If most financial institutions do not spell out their opposition to fossil fuel exclusion in SFDR categories, the European Fund and Asset Management Association (EFAMA) goes to great lengths to justify its refusal of any type of exclusion for the \u201ctransition category\u201d. The arguments used by the EFAMA would ensure that fossil fuel companies are not kicked out of funds making sustainability claims. They mean that coal, oil and gas companies that are still massively developing fossil fuel production, only very marginally investing in sustainable energy, and have recently scaled back their climate targets and commitments (11) could still be found in \u201ctransition\u201d funds.<\/p>\n<\/div><\/div><\/div>

EFAMA:<\/p>\n<\/div>

\u201cThe concept of transition often applies to companies with mixed activities (e.g. utilities producing both fossil-based and renewable energy), which are in the process of phasing out harmful operations and building up sustainable ones. Importantly, meaningful transition takes time. Some of the most impactful outcomes may stem from investments in high-emitting sectors that are committed to changing course. […] Therefore, minimum exclusions should not automatically apply to the Transition category.\u00a0\u00bb<\/em><\/p>\n<\/div><\/div><\/div>

Interestingly, contributions often refer to the position of the Platform on Sustainable Finance (PSF) (12). They do so either without mentioning related fossil fuel exclusions \u2013 notably the EBF and Insurance Europe \u2013 or by misrepresenting the PSF recommendations on the topic. Indeed, they sometimes note the PSF recommends the use of exclusions in the Paris Aligned Benchmark (PAB) for a \u201csustainable\u201d category and in the Climate Transition Benchmark (CTB) for the two other proposed categories (\u201cESG-Collection\u201d and \u201ctransition\u201d). But they omit the fact the PSF also recommends reviewing both PAB and CTB exclusions to ensure that fossil fuel developers are excluded from all SFDR categories. This leads to institutions like the FBF supporting the PSF recommendations \u201con paper\u201d, yet being opposed to the fossil fuel exclusions it implies for \u201ctransition\u201d or \u201cESG\u201d categories.<\/p>\n<\/div>

If the European Commission blindly listens to the demands of financial institutions, the reviewed SFDR will largely reproduce the mistakes of the previous regulations and have little impact on retail investor confidence and the development of sustainable finance. New rules simply cannot be modelled to accommodate market practices that have been demonstrated to enable greenwashing. To prevent this, all SFDR fund categories must include robust minimum safeguards. And, providing their massive climate, environmental and human impacts, excluding fossil fuel developers is unavoidable for all of them.<\/strong><\/p>\n<\/div><\/div><\/div>

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Notes:<\/h3><\/span>
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  1. Reclaim Finance analyzed the public consultation responses from 33 financial institutions or advocacy groups for the financial sector. These included: the French Banking Federation (FBF) ; BPCE ; BNP AM ; Vanguard AM ; Insurance Europe ; Blackrock ; Union AM ; Insight Investment ; INVERCO ; Fidelity International ; Axa Group ; The Investment Association ; Cr\u00e9dit Agricole ; Allianz SE ; Association Fran\u00e7aise de Gestion (AFG) ; European Banking Federation (EBF) ; France Assureurs ; Association of German Banks ; Finance Denmark ; German Investment Funds Association BVI ; Amundi AM ; Pacific Asset Management ; Swedish Investment Fund Association ; France Invest ; LBP AM ; Schroders ; Lannebo Kapitalf\u00f6rvaltning ; Janus Henderson Investors ; Association of the Luxembourg Fund Industry ; MAIF ; Deka Investment GmbH ; Triodos Bank ; EFAMA.\u00a0 Some other responses were reviewed by Reclaim Finance but not integrated to the analysis as they did not provide clear enough information on the respondent\u2019s position on SFDR categories and fossil fuel exclusions (for example the response from the IFD, Mirova, Polish Bank Association, A\u00e9ma Group, etc.).<\/span>\u00a0<\/span><\/li>\n
  2. For example:\u00a0<\/span>\u00a0<\/span>\n
      \n
    1. \u00a0<\/span>BNP AM: \u201c<\/span>The objective should be to remove the ESG due diligence burden on end investors by providing them with categories based on clear, measurable minimum binding criteria that send a clear and simple message about where their money is going.<\/span><\/i>\u201d<\/span>\u00a0<\/span><\/li>\n
    2. Insight Investment: \u201c<\/span>Overall, we support a categorisation regime which includes (a) a clear indication of the sustainability intention, if any, that the product is seeking to achieve, and (b) minimum standards and thresholds for the relevant categories<\/span><\/i>.\u201d<\/span>\u00a0<\/span><\/li>\n
    3. Cr\u00e9dit Agricole: \u201c<\/span>Include a binding and measurable sustainable objectives for all ESG products with a careful balance between rigor and flexibility in order to avoid the risk to define niche categories. As such we believe that minimum investment requirement should be defined at high level without too prescriptive indicators.<\/span><\/i>\u201d<\/span>\u00a0<\/span><\/li>\n<\/ol>\n<\/li>\n
    4. \u00a0<\/span>The French Banking Federation (FBF) notes that: \u201c<\/span>The third category should not be a catch-all category like Article 8, but rather a distinct category of products with specific eligibility criteria.<\/span><\/i>\u201d<\/span>\u00a0<\/span><\/li>\n
    5. Some also call for flexibility in the way criteria are designed to accommodate even very limited progress on sustainability and\/or ESG. For example, BPCE notes that: \u201c[\u2026] <\/span>establishing a hierarchy to reward performing companies while encouraging moderate efforts is key to incentivizing manufacturers to build SFDR products and provide clarity to investor<\/span><\/i>\u201d.<\/span>\u00a0<\/span><\/li>\n
    6. Axa notes that: \u201c<\/span>For the time being, we believe that the existing 6, 8, 9 architecture should be preserved while allowing for quick fixes and methodologies clarification<\/span><\/i>.\u201d<\/span>\u00a0<\/span><\/li>\n
    7. Out of the 33 responses analyzed, 21 did not recommend fossil fuel exclusions or the use of frameworks that include such exclusions (for example PAB or ESMA Guidelines on fund names).<\/span>\u00a0<\/span><\/li>\n
    8. LBP AM recommends fossil fuel exclusions to be used for all categories. It notes that: \u201c<\/span>Exclusion of certain activities seems necessary considering their significant negative impact on sustainability issue. To this end, (i) generic ESG products should apply Climate Transition Benchmark (CTB) exclusions complemented by the exclusion of coal-related activities (ii) transition products should apply generic ESG exclusions complemented by the exclusion of any company active in the fossil fuel sector without transition plan aligning with the Paris Agreement objectives ; and (iii) sustainable products should apply Paris Aligned Benchmark (PAB) exclusions<\/span><\/i>.\u201d<\/span>\u00a0<\/span><\/li>\n
    9. Triodos Bank recommends PAB exclusions \u2013 including fossil fuel exclusions \u2013 to be used for the ESG category.<\/span>\u00a0<\/span><\/li>\n
    10. Six financial institutions and related advocacy groups recommend the use of fossil fuel exclusions for the \u201csustainable\u201d category: FBF ; Fidelity International ; AFG ; Association of German Banks ; German Investment Funds Association BVI ; Amundi. Additionally, three financial institutions mention the need to use PAB or the ESMA fund naming guidelines \u2013 that both include some fossil fuel exclusions – but are not clear on if and where they would want related exclusions to apply: Vanguard AM ; Union AM ; Cr\u00e9dit Agricole.\u00a0<\/span>\u00a0<\/span><\/li>\n
    11. ESMA fund naming guidelines are <\/span>a welcome step but are insufficient<\/a><\/span> to prevent greenwashing, notably due to weak criteria for funds named \u201ctransition\u201d, \u201csocial\u201d or \u201cgovernance\u201d. In fact, preliminary research already show <\/span>\u201ctransition\u201d named funds have increased their exposure<\/a><\/span> to fossil fuels since the guidelines were implemented and many asset managers <\/span>simply renamed their funds instead of complying<\/a><\/span>. If they show the need for action, the fund naming guidelines therefore cannot serve as a basis for reviewed SFDR categories and major adjustments are needed, notably regarding fossil fuel exclusions.<\/span>\u00a0<\/span><\/li>\n
    12. See <\/span>Reclaim Finance\u2019s analysis<\/a><\/span> of the strategies of oil and gas companies and its <\/span>article on the climate backtracking of European oil and gas companies<\/a><\/span>.<\/span>\u00a0<\/span><\/li>\n
    13. The PSF is mentioned in the responses from: FBF ; Insurance Europe ; AFG ; Cr\u00e9dit Agricole ; German Investment Funds Association BVI ; Amundi ; Pacific Asset Management ; LBP AM ; MAIF ; Deka Investment GmbH ; EFAMA.<\/span>\u00a0<\/span><\/li>\n<\/ol>\n<\/div><\/div><\/div><\/div><\/div>

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