Paris, Thursday 20 November 2025 – The European Commission has excluded companies developing new fossil fuel projects from \u201csustainable\u201d and \u201ctransition\u201d funds in its proposal for reforming the Sustainable Finance Disclosure Regulation (SFDR), published today. The text, unlike the version leaked a few days earlier, recognizes that such practices are incompatible with climate-related claims. Reclaim Finance welcomes the strong signal that this sends, but stresses that the proposal is not robust enough, particularly as funds in the \u201cESG\u201d category could still be invested in oil and gas developers. Reclaim Finance calls on Member States and MEPs to exclude these companies from all future SFDR categories.<\/p>\n<\/div>
The European Commission published its proposal for reforming the Sustainable Finance Disclosure Regulation (SFDR) today (Wednesday), establishing different categories of environmental funds and defining the non-financial information they must provide (1).<\/p>\n
In its text, the Commission establishes three categories of funds: \u201csustainable\u201d (Article 9), \u2018transition\u2019 (Article 7) and \u201cESG\u201d (Article 8) \u2013 with the exact names of these categories to be defined at a later date. Following an appeal from more than 120 organizations, experts, and representativees from the financial sector (2), the text excludes companies developing new fossil fuel projects from both the \u201csustainable\u201d and \u2018transition\u2019 fund categories (3). The \u201cESG\u201d category now excludes coal companies but does not have any exclusions regarding the oil and gas sector, creating a risk that investors will be misled as they could assume that this category provides such minimum environmental guarantees.<\/p>\n<\/div><\/div><\/div>
The European Commission acknowledges in this proposal that companies like TotalEnergies or Shell, which develop new fossil fuels, cannot be considered to be in transition and cannot be included in the sustainable finance market. This text closes the door on the most blatant greenwashing practices, but it will need to be significantly strengthened to allow investors to make informed decisions.<\/p>\n<\/div>
Lara Cuvelier, sustainable investment campaigner at Reclaim Finance<\/p>\n<\/div><\/div><\/div>
The SFDR reform comes in the wake of numerous scandals revealing the presence of coal, oil, and gas companies in supposed \u201csustainable\u201d funds (4), despite the demands of investors seeking responsible investments (5). It also follows the publication of guidelines by the European Securities and Markets Authority (ESMA) regulating the use of sustainability-related terms in fund names.<\/p>\n
The text proposed by the European Commission will be examined by the European Council and the Parliament, and Reclaim Finance is calling on Member States and MEPs to demand the exclusion of companies developing new oil and gas projects from all SFDR categories. The NGO stresses that a robust SFDR regulation is essential to mobilize finance and savings in favor of the transition (7) and help bridge the current financing gap (8).projects from all SFDR categories. The NGO stresses that a robust SFDR regulation is essential to mobilize finance and savings in favor of the transition (7) and help bridge the current financing gap (8).<\/p>\n<\/div><\/div><\/div>