The EU’s new sustainable investment plan needs to be completely fossil expansion-free

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illuminem summarises for you the essential news of the day. Read the full piece on WWF or enjoy below:

🗞️ Driving the news: A coalition of 133 organisations and experts is urging EU lawmakers to fully exclude companies developing new fossil fuel projects from all categories of the revised Sustainable Finance Disclosure Regulation (SFDR), warning that partial exclusions risk greenwashing and undermine climate credibility.

🔭 The context: A credibility test for EU sustainable finance
• The European Commission’s November 2025 proposal excludes fossil fuel developers from the “sustainable” and “transition” categories — but not from the “ESG basics” category
• Signatories argue this creates incoherence by allowing ESG-labelled funds to continue financing fossil expansion
• The revision removed the original “Do No Significant Harm” (DNSH) principle, increasing pressure for stronger minimum exclusions
• 26 Member States and the European Parliament are now preparing their negotiating positions

🌍 Why it matters for people and the planet: Scientific assessments from the IPCC and UN Production Gap Report show no new fossil fuel development is compatible with 1.5°C pathways
• Retail investors increasingly expect “green” or “responsible” funds to exclude fossil fuel developers
• Recent greenwashing rulings — including cases involving major oil companies — heighten legal and reputational risks
• Allowing ESG-labelled funds to finance expansion could erode investor trust and weaken the EU’s global sustainable finance leadership

⏭️ What’s next: EU co-legislators must negotiate final SFDR rules in the coming months
• Civil society and financial institutions are pushing for fossil fuel exclusions across all voluntary product categories
• The outcome could shape capital flows across Europe and determine whether the SFDR remains a credible climate-aligned framework

📈 One stat: The open letter is backed by 133 signatories, including 87 civil society organisations, 12 financial institutions, 25 academics and 9 independent experts.

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