SFDR Funds 2026: Greenwashing Prevention for Financial Advisors

Dual regulation: SFDR + EmpCo. Financial products are subject to two separate greenwashing regulations: SFDR (Sustainable Finance Disclosure Regulation, EU 2019/2088) for disclosure to investors, and EmpCo (EU 2024/825) for advertising statements to consumers.

SFDR classifications: Article 6 has no sustainability characteristics, Article 8 promotes sustainability characteristics, and Article 9 has sustainable investments as its objective. In 2024, many Article 9 funds were reclassified as Article 8 – the EU supervisory authority ESMA became stricter.

EmpCo consequences for financial advisors from 27 September 2026: “Green fund” without a proportion aligned with the EU Taxonomy = liable to warning notice. “Sustainable investment” without SFDR classification = liable to warning notice. “ESG investment” without a rating = liable to warning notice.

Correct marketing with SFDR + EU Taxonomy: “SFDR Article 9 Fund, EU Taxonomy alignment 78 % (as of 2024)”. With MSCI/Sustainalytics rating: “MSCI ESG Rating AA (2024)”. With Best-in-Class: “Best-in-Class selection according to MSCI ESG methodology, top 25 % per sector”.

Risk of non-compliance: Professional indemnity insurance may not apply in the event of intentionally misleading advertising. BaFin (Federal Financial Supervisory Authority) may withdraw advisor authorisation. Consumer claims with reversal of the investment.