SFDR 2.0 in Trilogue: Where the Negotiations Stand and When the Rules Might Apply

Two questions have followed SFDR 2.0 since the Commission unveiled it in November 2025: what changes, and when. We covered the first in our initial breakdown of the overhaul, and the second in our guide to preparing for the new rules in January 2026. This piece focuses on the timeline itself: what is happening in the legislative process, why it has moved more slowly than original projections suggested, and what realistic compliance windows look like.

No exact date has been set. The final terms, including the transition period, will be decided in trilogue, the EU’s closed-door negotiation process between Council, Parliament, and Commission. However, the window for the first compliance should fall somewhere between June 2029 and June 2030, depending on how negotiations unfold over the next twelve months.

The Council is ready for SFDR 2.0, but Parliament is not

Trilogue can only begin once all three institutions have a position on the table. The Commission published its proposal in November 2025. The Council followed on 19 June 2026, agreeing a mandate that Member States can no longer reopen. The European Parliament is the remaining bottleneck. Before it can negotiate anything, it must clear two votes: the ECON committee vote (currently expected September 2026) and the full plenary vote (expected September/October 2026). Neither has happened yet, and the ECON vote is already delayed, as ECON was expected to have a preliminary draft position by July 2026.

Once Parliament has its position, the three institutions enter trilogue. Accounting for the dynamics explained below, the realistic expectation is that negotiations begin in Q4 2026 and a political agreement is reached around mid-2027.

What trilogue is and why it matters

But what does this all mean? And why is this process so rigid? The EU’s ordinary legislative procedure requires Parliament and Council to develop their positions independently before they can negotiate together. The Commission drafts the proposal; Parliament and Council each amend it separately; then all three institutions meet in trilogue — private, closed-door sessions — to produce a single agreed text. Small delegations from each side meet repeatedly to work through disagreements, with the Commission acting as mediator. Almost nothing is published while it’s happening, progress is measured in “rounds” rather than dates, and the pace speeds up or stalls depending on discussions. 

For SFDR 2.0, the issues still to be resolved in trilogue include the length of the transition period (18 versus 24 months), the criteria for fund categories, and the scope of the PAI regime. These  gaps typically require three to five rounds of negotiation over several months to resolve. A standard trilogue on a contested file runs three to eighteen months, and SFDR 2.0 is contested.

After trilogue: the last steps

Once a deal is struck, legal-linguistic experts refine the wording across all 24 official EU languages. Parliament and Council each hold a formal vote to adopt the agreed text, after which no further amendments are possible. The law is published in the EU Official Journal and enters into force 20 days later. This legal scrubbing and formal adoption process typically adds two to four months between the political deal and entry into force. Only after entry into force does the transition period, or compliance countdown, begin.

Why the timeline has stretched from original projections

Some early estimates placed SFDR 2.0 application from as early as 2028. That might now be off the table. Several factors have contributed to a later timetable.

The most immediate cause is parliamentary politics. MEP groups are already divided in the ECON committee: the EPP is pushing for deeper deregulation, while the S&D and the Greens want stricter anti-greenwashing rules. The transition-fund carve-out has emerged as a known sticking point.  It is difficult to say how these divisions will play out in the plenary sessions. Indeed,  friction  has already delayed the ECON vote by roughly two months, and the August recess, which closes down parliamentary business over the summer, means there is no opportunity to recover that time before autumn.

Structural factors add further pressure. Ireland holds the rotating Council presidency until December 2026. A file that enters trilogue in November may not  close before the presidency changes hands, and the incoming presidency needs time to get up to speed, pushing a realistic political agreement into early-2027. Even once a deal is reached, the legal-linguistic review and formal adoption process add the two to four months described above.

Beyond timing, the three texts may diverge on substance. Differences in approach are already visible between the Commission and the Council, and further gaps appear in the amendments proposed by the Parliament’s ECON committee. The transition-period gap is only one point of contention; disagreements over the category criteria and the PAI regime each call for their own compromise. Together, they make a swift trilogue unlikely, even under favourable political conditions.

Could it move faster?

Yes. All three institutions broadly support the goal of simplification, which reduces the risk of fundamental deadlock. If Parliament delivers its plenary position in September and Ireland pushes hard for a pre-Christmas agreement, a deal by end-2026 is possible,  though it would require an unusual alignment of circumstances. In that scenario, everything shifts forward by roughly twelve months.

Two scenarios for when SFDR 2.0 will apply

With those variables on the table, two realistic timelines emerge. A fast-track scenario built on a deal by end-2026 and the Commission’s preferred 18-month transition period. And a baseline scenario aligned to a mid-2027 deal and the Council’s preference for 24 months. The Parliament’s position, which is not yet known, will be the decisive factor. In practice, the outcome is likely to land somewhere between the two.

How Clarity AI is helping clients prepare while the timeline remains uncertain

A moving legislative calendar is not a reason to wait. Whether first compliance lands in 2029 or 2030, the underlying work of understanding how a portfolio maps to the new SFDR categories does not change with the date, and firms that start now will not be scrambling once a transition period is confirmed.

Start now with our SFDR 2.0 Check, a free tool that shows how your existing products could align with the proposed new SFDR categories, no matter which timeline plays out.