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Should European 'transition' funds finance companies developing new fossil fuel projects?
As EU lawmakers finalise the revised EU Sustainable Finance Disclosure Regulation (SFDR) in trilogue negotiations, this memo sets out the legal, market, regulatory and investor protection reasons why the answer is no. It shows that excluding fossil fuel expansion from Article 7 SFDR funds is necessary to protect investors, prevent transition-washing, and reduce legal risks throughout the EU sustainable investment chain.
A clear expansion exclusion in Article 7 would reflect climate science, match investor expectations, align with greenwashing law and precedent in the EU, and help firms and regulators apply the framework with confidence across Europe.