The European Commission has unveiled plans to restructure the Sustainable Finance Disclosure Regulation (SFDR) framework, marking one of the most significant ESG policy reforms since 2021. Dubbed “SFDR 2.0,” the proposed system will replace the widely used Article 8 and 9 classifications with clearer, mandatory sustainability categories for investment products.
Under the draft proposal, funds must meet at least 70 percent alignment with verified sustainability criteria to qualify as ESG-compliant. The update also removes the burdensome “Principal Adverse Impacts” reporting structure, which many asset managers criticized as too complex.
Analysts expect the reform to create a wave of re-classifications across European portfolios, especially among crypto-related funds and digital-asset ETFs that previously leveraged “green” marketing language without strong data support.
The policy shift could ultimately enhance transparency, but it also exposes asset managers to stricter due diligence and reputational risk. ESG-oriented investors may now demand proof of environmental integrity, particularly from blockchain-based projects claiming carbon neutrality.
This move underscores a growing global trend: sustainability narratives must now be backed by measurable outcomes, not branding. For the crypto industry, the days of “green-washing” are numbered.
