The EU continues to prioritise simplification of the sustainable finance regulatory framework. Following the entry into force of the Sustainability Omnibus Directive amending the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) at the start of 2026, focus has shifted to secondary legislation, implementation and ensuring coherence with other elements of the framework. The revision of the European Sustainability Reporting Standards (ESRS) has entered its final stages, with completion expected by the end of this year, and the European Commission is also further streamlining EU Taxonomy reporting. The Sustainable Finance Disclosure Regulation (SFDR) is being reviewed to create a categorisation system for sustainable investment products
AFME’s Work
AFME continues to engage with relevant stakeholders on the simplification of EU sustainable finance regulation including the ESRS, SFDR, EU Taxonomy reporting and ESG risk management regulation. AFME previously engaged on the Omnibus I package to amend the CSRD, the CSDDD, and Taxonomy reporting requirements, which have now been completed. A proportionate, stable and coherent sustainable finance framework remains essential to support banks’ role in financing the transition and strengthening the EU’s economic competitiveness.
AFME strongly supports the initiative to streamline the EU sustainable finance regulatory framework, ensuring it focuses on mobilising capital and financing for the transition while minimising regulatory burdens. This should go together with measures to create the economic conditions to support investment in companies as they transition, as set out by the European Commission in the Clean Industrial Deal and recognised in the Clean Energy Investment Strategy.
The Omnibus amendments to the CSRD, the CSDDD, and Taxonomy reporting are welcome steps towards cutting complexity. Clear, workable rules will support the mobilisation of finance for the transition while minimising unnecessary regulatory burdens and supporting competitiveness.
Notwithstanding these important efforts, the EU’s sustainable finance framework remains the most ambitious globally. Policymakers must continue to streamline regulation and support competitiveness – including through a substantive review of Taxonomy reporting and banking legislation and supervisory requirements – to ensure that it remains effective, proportionate, and internationally competitive.