European Parliament set to exclude alternative funds from SFDR

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🗞️ Driving the news: The European Parliament's ECON committee is expected to vote Thursday to exclude alternative investment funds from the SFDR categorisation regime, having secured support from the EPP grouping
• The vote had been postponed from 15 July after nearly 600 amendments were tabled on the rapporteur's draft report
• A plenary vote is expected in the week of 14 September

🔭 The context: The Commission's SFDR 2.0 proposal, published 20 November 2025, would replace the Article 8 and 9 framework with three voluntary categories — Sustainable, Transition and ESG Basics
• Each category require would at least 70% of the portfolio to support the relevant strategy
• The Council agreed its negotiating mandate on 24 June 2026 and already backs an opt-out for AIFs marketed exclusively to professional investors. Two questions have divided the institutions: this exemption, and how far the Transition category should accommodate fossil fuel companies pursuing transition strategies.

🌍 Why it matters for the planet: Alternative funds hold substantial capital in infrastructure, energy and real assets
• Removing them from a common categorisation regime means that capital is no longer classified against shared sustainability criteria
• It cannot be aggregated, compared, or measured against EU climate objectives
• The parallel dispute over fossil fuel exposure in the Transition category determines whether continued fossil expansion can be labelled transitional at all

⏭️ What's next: If ECON and plenary adopt the position, trilogue negotiations with the Council and Commission are expected in early Q4 2026
• The Council proposes SFDR 2.0 applies 24 months after entry into force, with grandfathering available for closed-ended funds established beforehand

📈 One stat: Nearly 600 amendments were tabled following the ECON rapporteur's draft report, delaying the vote from July to September

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