Regulation of sustainable financial products is a cornerstone of the EU’s sustainable finance framework, with the Sustainable Finance Disclosure Regulation (SFDR) at its centre. Despite its centrality, the operation of key SFDR provisions is far from straightforward, owing to two principal factors. First, since its adoption, extensive interpretative guidance issued by the European Commission (EC) and the European Supervisory Authorities (ESAs) has substantially shaped SFDR’s application. Second, subsequently adopted legislative acts related to sustainable finance have embedded the SFDR within a broader and increasingly complex regulatory architecture. This article reconstructs that framework by analysing the SFDR’s core provisions together with the interpretative pronouncements of the EC and ESAs. It also examines the SFDR’s interaction with the Taxonomy Regulation (TR), the MiFID II rules on sustainability preferences, and the EU Climate Benchmarks Regulation (CBR). The article argues that the EU framework for sustainable financial products is hampered by conceptual ambiguity, technical complexity, and imperfect coordination between various legislative acts that constitute it. These deficiencies in primary law necessitate reliance on evolving, non-binding guidance to resolve interpretative difficulties, which produces legal uncertainty for market participants. Against the backdrop of the ongoing revision of the SFDR, the EU should heed the lessons learned from the (mal)functioning of the existing framework in order to avoid repeating its shortcomings.
European Business Law Review