Read the full letter here.

The EU is revising its Sustainable Finance Disclosure Regulation (SFDR), a key framework designed to direct capital toward sustainable investments aligned with climate goals. In November 2025, the European Commission proposed categorizing funds into three voluntary tiers, ESG basics, transition, and sustainable, while introducing exclusions for fossil fuel developers in the latter two categories. This acknowledges that new fossil fuel projects contradict sustainability claims, climate science, and even recent greenwashing court rulings, such as those against TotalEnergies. However, the proposal falls short by allowing the ESG basics category to include companies expanding fossil fuels, potentially misleading investors who expect any “green-labeled” fund to avoid such activities.

FEBEA, alongside WWF and 131 other organizations, financial institutions, academics, and experts, a total of 133 signatories, has co-signed an open letter urging the European Parliament and Member States to close this gap. The letter demands consistent exclusions across all SFDR categories, arguing that partial measures undermine the framework’s credibility, especially with the removal of the “Do No Significant Harm” principle. This is critical as surveys show most retail investors oppose fossil fuels in responsible funds, and leaders like Ursula von der Leyen have emphasized shifting to a clean economy.

A coherent SFDR revision would prevent greenwashing, restore investor trust, and ensure funds truly support EU competitiveness and the 1.5°C pathway, as outlined in IPCC and IEA scenarios. With Parliament and Member States preparing positions soon, the signatories call for swift action to align rules with science and avoid incoherence.